The Effect of Parental Joblessness on Wages in Australia

• In Event: 2266 - Family Section Roundtables (1 hour)
  In Refereed Roundtable 60min: 21. Wage Penalties, Premiums, and Work Outcomes

Abstract

Parental joblessness, which is increasingly being used as an indicator of childhood poverty, is negatively associated with children’s educational attainment and employment in adulthood. However, its impact on children’s subsequent wage outcomes in early adulthood remains unknown. This study examines whether time spent with jobless parents during childhood and adolescence is associated with lower wages during early adulthood, conditional on employment. Using 8,771 person-year observations from 2,232 children in the Household, Income, and Labour Dynamics in Australia (HILDA) Survey, we estimate a series of multilevel mixed-effects regression models. We find negative associations between exposure to parental joblessness and wages after controlling for observable characteristics such as educational attainment, demographic background, and socioeconomic origins. These results suggest that in Australia, the employed children of previously-jobless parents face wage penalties in addition to previously established employment penalties. For an average employed individual, a 40 percent increase in the proportion of time spent with jobless parents reduced wages by 1 AUD per hour, or roughly 5 percent.

Authors

• Matthew Curry, University of Melbourne

• Irma Mooi-Reci, The University of Melbourne

• Mark Wooden, University of Melbourne