Job Loss at Home: Children's School Performance during the Great Recession in Spain. CEP Discussion Paper No. 1364

This paper studies the effect of parental job loss on children's school performance during the Great Recession in Spain, using an original panel dataset for students observed since the beginning of the crisis in a school in the province of Barcelona. By using fixed effects, this paper is more likely to deal with the problem of selection into troubled firms which is prevalent in the literature. Fixed effect estimates show that students experience a negative and significant decrease on average grades of about 13% of a standard deviation after father's job loss. The impact of paternal job loss is not homogeneous across students, but it is largely concentrated among children whose fathers suffer long unemployment spells after job loss and students in already disadvantaged families in terms of the father's education level. These results suggest that paternal job loss is a mechanism through which further inequalities might develop during and after a deep economic crisis. The following are appended: (1) The impact of parental job loss on grades. A simple theoretical framework; and (2) More details on the data.