Short-run effects of parental job loss on children's academic achievement

We study the relationship between parental job loss and children's academic achievement using data on job loss and grade retention from the 1996, 2001, and 2004 panels of the Survey of Income and Program Participation. We find that a parental job loss increases the probability of children's grade retention by 0.8 percentage points, or around 15%. After conditioning on child fixed effects, there is no evidence of significantly increased grade retention prior to the job loss, suggesting a causal link running from the parental employment shock to children's academic difficulties.

Research highlights▶ Parental job loss is associated with significant increases in a child's probability of repeating a grade in school. ▶ This relationship is robust to controls for the child's own and siblings’ previous grade retention. ▶ The timing of the increased grade retention supports a causal role for job loss.