Intergenerational Labor Market Scarring

Abstract

This paper studies the intergenerational effects of a higher unemployment rate at the time of school-leaving. Using data from the National Longitudinal Survey of Youth and an instrumental variables approach, we find no evidence that early labor market conditions for mothers affect their children’s outcomes. These null effects are precisely estimated; for a one standard deviation increase in the state unemployment rate at a mother’s time of school-leaving, we can rule out detrimental effects on their child’s low birthweight status, educational attainment, and age 29-30 employment larger than 0.15 standard deviations.