Using data from a natural experiment, provided by the post-communist transition of Hungary, we estimate the causal effect of unexpected long-term unemployment of parents on their children’s educational achievement. In the natural experiment, parents lost their job unexpectedly and remained unemployed. We estimate the effect of the child’s age at the time of the parents’ job loss on her/his secondary school dropout probability at a later age. The estimates identify the causal effect of an additional year reared in a family with regularly employed parents, which can be interpreted as extra human capital investment. We demonstrate that the causal effect is substantial, and is significantly stronger for preschool age children than for older ones. |
