Blame the Parents? How Parental Unemployment Affects Labor Supply and Job Quality for Young Adults

Abstract

We study the role of shocks to parental income in determining the labor market outcomes of children entering the labor market. We find that a child whose parent loses a job prior to the child’s labor market entry is, on average, induced to work 9% more in the 3 years following labor market entry than a child whose parents lose a job after the child’s entry. This effect is concentrated on the extensive margin and decreases in magnitude over time. We find no evidence that these shocks affect the quality of the job that entrants find.