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STATE OF OPPORTUNITY. Can Kids in Michigan Get Ahead?
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Health

How a parent's job loss affects kids health

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Michigan is beginning to reach a state of normalcy after the worst economic shock in a generation. Last week, the state announced the unemployment rate held steady at 5%, which matches the national average. Which is to say, Michigan is no longer a worse-than-average place for people trying to find work. 

And that's good news, because a new economic paper spells out just how bad a job loss can be not just for the adults going through it, but for their kids too. 

The new paper, by two economists at the University of Arizona, and published today by the National Bureau for Economic Research, looks specifically at the health outcomes for kids whose parents lost a job. Other researchers have looked at how a job loss affects the parents, and how it affects kids' academic outcomes. But this new paper focuses on what happens to a child's mental and physical health when a parent loses a job. 

Spoiler alert: It's not great. 

But, actually, it's not entirely bad either. It turns out that it matters which parent loses the job. As the paper's authors write: 

We find that a father’s job loss also increases children’s incidence of anxiety and depression and we see increases in the incidence of injuries following paternal job loss in low-SES [socio-economic status] families. By contrast, maternal job loss in high-SES families reduces children’s incidence of infectious illness.

Translation: When dads lose a job, kids are more likely to be anxious, sad and hurt. When mom loses a job, kids are actually less likely to get sick. 

The hypothesis for why kids would come down with fewer colds when mom loses a job is simply that mom would be more likely to stay home to care for the kids, which means the kids aren't exposed to all those germs at daycare. The effect here isn't huge: kids whose moms lose a job are about 6-10 percent less likely to get sick, according to the paper. But it is telling that the effect doesn't show up at all when dads lose a job. If the hypothesis is correct, this finding is one more confirmation that dads don't really pull their weight in the childcare area, even when the dad is unemployed.

And while the benefit in fewer illnesses is somewhat small when mom loses a job, the downside when dad loses a job is huge. The paper's data show that kids are 100 - 150% more likely to show signs of anxiety or depression after a father's job loss. 

Those results confirm earlier research that showed damage to kids' academic status following a parents' job loss, as well as damage to the child's long-term earnings potential as an adult. 

Perhaps not surprisingly, all these effects are worse for families who start out with less to begin with, families who are considered "low socioeconomic status." 

As in previous studies, we find striking patterns when we stratify by socioeconomic status (SES). Specifically, we find that the negative effects of paternal displacement on child mental health are concentrated among low-SES families. We additionally find statistically significant negative effects of paternal job loss on a child’s physical health rating and significant increases in the incidence of injuries following paternal job loss among children in low-SES families that are not apparent in the full sample. Looking at the effects of maternal displacement, the coefficients are mostly similar for low- and high-SES children, with one major exception: we see that the reductions in infectious illness are substantially larger among children in high-earnings families and children with more-educated parents.

So, yeah, those positive health benefits we talked about earlier when mom gets to stay at home? Those mostly only happen in families that have more money to begin with.