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The Impact of Parental Resources on Human Capital Investment and Labor Market Outcomes: Evidence from the Great Recession

June 2024

Written by: Jeremy Kirk

Working Paper Number:

CES-24-34

Abstract

I study the impact of parents' financial resources during adolescence on postsecondary human capital investment and labor market outcomes, using house value changes during the Great Recession of 2007-2009 as a natural experiment. I use several restricted-access datasets from the U.S. Census Bureau to create a novel dataset that includes intergenerational linkages between children and their parents. This data allows me to exploit house value variation within labor markets, addressing the identification concern that local house values are related to local economic conditions. I find that the average decrease to parents' home values lead to persistent decreases in bachelor's degree attainment of 1.26%, earnings of 1.96%, and full-time employment of 1.32%. Children of parents suffering larger house value shocks are more likely to substitute into two-year degree programs, drop out of college, or be enrolled in a college program in their late 20s.

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Keywords Keywords are automatically generated using KeyBERT, a powerful and innovative keyword extraction tool that utilizes BERT embeddings to ensure high-quality and contextually relevant keywords.

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:
financial, recession, loan, wealth, housing, residential, socioeconomic, home, parent, intergenerational, family, parents income, parental, household income, house, income households, mortgage

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:
Organization for Economic Cooperation and Development, National Longitudinal Survey of Youth, Decennial Census, American Community Survey, PSID, Protected Identification Key, Earned Income Tax Credit, Core Based Statistical Area, Master Address File, Census Bureau Disclosure Review Board, MAFID, Census Bureau Person Identification Validation System, Federal Statistical Research Data Center, MAF-ARF

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