Parental job loss and children’s career choices

Abstract

We examine how shocks to parents’ careers affect the children’s educational choices and career outcomes. Using Finnish administrative data, we find that a father’s job loss decreases the likelihood of a child choosing the father’s study field. Children of displaced fathers have lower earnings and are more likely to choose study fields with lower predicted earnings; however, we find no effects on the outcomes measured before study choices are made, such as school grades, inactivity and juvenile delinquency. The results suggest that labor market shocks can carry over to the next generation through children’s career choices.