Do Consequences of Parental Job Displacement for Infant Health Vary Across Local Economic Contexts?

This study examines the consequences of parental job displacement for birth outcomes and investigates how the effects vary with regional unemployment rates. We use Swedish register data and exploit plausibly exogenous variation caused by workplace closure to reduce the bias related to reverse causality and confounding. The differences in birth outcomes between children of parents who experienced job displacement and children of parents who were not displaced turn out to be quite modest. Even in the most disadvantaged regions, with the highest unemployment rates, parental job displacement is not harmful for health at birth. We relate these findings to the institutional setting in Sweden and discuss policy implications for the United States.