Paul Gregg, Lindsey Macmillan and Bilal Nasim
The research on intergenerational correlations in outcomes is increasingly moving from measurement into assessment of causal transmission mechanisms. This paper analyses the causal impact of fathers’ job loss on their children’s educational attainment and later economic outcomes. To do so, we isolate the effect of job loss associated with major industry contractions, mainly in manufacturing, during the 1980s recession by mapping industry level employment change data from 1980 to 1983 into the British Cohort Study (BCS). Children with fathers’ who were identified as being displaced did significantly worse in terms of their GCSE attainment than those from non-displaced families. A child with a displaced father obtained on average 17 grade points lower or half a GCSE grade A-C less than their otherwise identical counterparts, the equivalent of 2.2% lower wages as an adult. There is also a small effect of fathers’ displacement on the early labour market attachment of children, but no direct impact on their earnings at 30/34. This does not mean that the impact of job loss will not affect social mobility. Those with lower income, education and social class were most affected by job losses and there is a direct effect on education and youth unemployment which we know to be drivers of later earnings. This suggests that the recent recession may have significant long-term consequences for the children of those who lost their jobs.