Postpartum Job Loss: Transitory Effect on Mothers, Long-run Damage to Children

Abstract

The first year after childbirth involves dramatic changes to parents’ lives and is crucial for children's development. Using plausibly exogenous job loss from mass layoffs and establishment closures, we provide novel evidence on the effect of adverse shocks in the first postpartum year on mothers and children. Our results reveal that effects of adverse labor shocks among females are significantly larger in the first postpartum year. No such differential effects are present among males. Additionally, we find long-lasting harm to children's educational outcomes 15 years after the displacement event took place. The child effects are not present among those who experience paternal labor shocks. To better understand these results, we investigate several potential mechanisms, including income, mobility, spousal labor supply responses, fertility, and marital dissolution.