Parental job loss across child age and human capital formation

We provide evidence on how the consequences of shocks to the home environment vary depending on the age at which children are exposed. We do so by comparing the outcomes of children whose parents experience involuntary job displacement episodes at different points of the children’s lives. Using linked Norwegian administrative data, we examine educational and behavioral outcomes throughout childhood and adolescence, along with mental health and earnings at age 30. We find that shocks occurring in early adolescence have large and persistent effects, often comparable to or larger than those in early childhood. These age-specific effects may reflect both differences in children’s sensitivity and differences in parental responses across stages of childhood. To better understand these patterns, we examine a broad set of parental and household responses, including changes in household resources, parental behaviors, and the emotional and psychological environment of the home.