Early life circumstances and labor market outcomes over the life cycle

Abstract

Some consequences of adverse events early in life for labor market outcomes may emerge early and others only later in adult life. We use data from the Survey of Health, Ageing and Retirement in Europe to investigate how early life circumstances—childhood health and socioeconomic status (SES)—are associated with various labor market outcomes over an individual’s entire life cycle. Our main new finding is that these associations change significantly over the life cycle. For instance, the association of childhood SES with lifetime earnings is shown to become stronger over the life cycle and to operate through both working years and annual earnings. We discuss how our findings can explain some of the mixed evidence on these associations in previous literature. Our results also shed light on the potential gains in the different labor market outcomes of public policies that invest in children’s health and parents’ SES.