Losing a job and subsequent periods of unemployment can have detrimental effects not only on the individual itself, but also on the children of the individual. This has implications for the welfare state and its potential to buffer economic hardships, but also for social inequalities in schooling as risks of job-loss are higher for lower class jobs, and since different status groups might be affected differently.

We extend this field by studying the effect of job-loss among employees on scholastic performance and educational transitions of secondary school students in Denmark, taking the subsequent career trajectories of the parents into account in order to qualify the nature of the job loss as being related to up- or downward income mobility. Moreover, we analyze the differences of the effect of job loss by parental educational attainment.

Theoretically, there are different reasons why we expect an effect of parental job losses on the learning and on educational decisions of children. First, the effect of job-loss and unemployment could due to the income loss of the family, which reduces the family’s investments in their children. The second mechanism focuses on the negative impact on the psychological well-being of the parent and how it might be transmitted to their children. Job loss does often mean more than just a loss of income; it can also be a loss of status and comes with social stigma, and it can create feelings of anxiety and shame for the individual (Brand 2015). Parents who experience their job loss in a problematic way can create a more stressful home environment for children, where parents are less able to provide psychological support and a stable learning environment. Furthermore, children are sensitive to the emotional state of their parents. Thus, if the job loss affects the child’s mental health, this can then have negative effects on learning and participation in schools. Within this perspective of looking at job-loss as stressful event, it is often suggested that job-loss is part of a cumulative disadvantage (DiPrete and Eirich 2006), as job-loss happens more often for low SES, increases the chance of parental divorce, and residential mobility (Brand 2015), which are also associated with negative child outcomes (Astone and Mclanahan 1994; Gruber 2004).

A third mechanism relates to the value the child and family attributes to education, and argues that the job-loss can reduce the family attribute towards education and work (Brand 2015). Within a rational choice perspective, different effects of job-loss on school performance and educational decisions are often assumed. The assumption is that job-loss will primarily affect the student’s propensity to continue on to higher levels of education or take an academic track, but not so much the academic abilities of the student, as it is more strongly related to the parent’s socioeconomic background. Job-loss will hereby have an effect on the educational decision irrespective of any potential effect on school performance.

The few recent studies that have addressed the effect of having socially mobile parents during childhood suggest that children of downwardly mobile parents do worse than their peers in their class of origin, but do better than their peers in their class of destination, and vice versa for the upwardly mobile (Byrne et al. 2018; Plewis and Bartley 2014). Yet, previous research has overlooked the possible combined effects of parental job loss and subsequent downward social mobility on children’s educational outcomes. 

We analyze data for secondary school students in Denmark in their final year (grade 9, which is the 10th year of schooling) using population wide microdata from administrative registers. This allows us to both study final school marks as well as the transition into upper secondary tracks, vocational education or leaving the school system. We use the students’ final exam grades from compulsory education as a measure of their school performance. In Denmark students both take verbal and written exams, we will only use the written exams in order to reduce potential biases from student teacher interactions in the verbal exams. We both look at the overall marks, but also divide them into math and Danish. The educational transition we study is the one from compulsory education to upper secondary education. The students – in general – have three options to choose from: (1) No further education, (2) Academic upper secondary education, (3) Vocational upper secondary education. We apply different statistical models of data analysis, among others sibling fixed effects models in order to control for factors that differ between families. We further control for life events that might coincide with job-losses, such as moving of the family or divorces. On the parental-level, we are able to control for: occupational status, educational level, family wealth, part-time or full-time job, income, private or public employer, residential mobility, parents relationship-status (Live with both parents, live with single mother, live with single father, live with single mother and their new partner, live with single father and their new partner, do not live with parents).

Our results show that effects are rather small and in most cases not statistically significant, which indicates a certain buffering of the economic losses by the welfare state. The effect does furthermore not depend on the changes in income. The financial loss itself is thus unlikely to explain the negative effects on children, as it is probably the case in other contexts.

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