When It Hurts the Most: Timing of Parental Job Loss and a Child’s Education

We estimate how the timing of parental job loss shapes children’s human capital by exploiting plant closures in Danish administrative data. We match treated children to observably similar untreated peers and difference out age-invariant selection using children whose parents are displaced after school completion. Job loss during infancy (ages 0–1) reduces ninth-grade mathematics achievement by 0.04 standard deviations and raises non-completion by 1 percentage point. Effects are smaller in later childhood. Treated infants are 1.4 percentage points less likely to enrol in general upper-secondary programmes. We find that liquidity-constrained households drive these results, suggesting that transient income shocks create permanent educational scars.