IZA DP No. 13752: Parental Unemployment, Social Insurance and Child Well-Being across Countries
revised version published in: Journal of Economic Behavior & Organization, 2022, 204, 600-617
Based on a unique repeated cross-sectional data set of school-aged children in Europe, the Middle East and North America, we analyze how children's subjective well-being is related to parents' employment status, depending on the institutional context. We find that parental unemployment is strongly negatively related to children's life satisfaction across countries and years. The effect is thereby moderated by the generosity of unemployment benefits. Exploiting across- and within-country variation, our results suggest that a higher benefit replacement rate alleviates the negative effects of fathers', but not mothers', unemployment. We further test the robustness of our results considering unemployment benefits jointly with social work norms. While the buffering effect of unemployment insurance remains, the spillover effects of paternal unemployment seem to be more pronounced in environments with stricter social work norms.