The Causal Effect of Family Difficulties During Childhood on Adult Labour Market Outcomes

Abstract

A propensity score matching approach and the National Child Development Study cohort database are used to evaluate the total causal effect of family difficulties during childhood on adult labor market outcomes. We find statistically significant evidence of a negative and long-lasting impact on employment probabilities and wages. Our estimates suggest that the occurrence of family problems in childhood reduces the chances of being employed by about 6 % and employees’ hourly wages by about 8.4 percent. Moreover, this effect appears not to decline over the cohort working life. Looking at specific family difficulties, we find that economic difficulties determine the greatest disadvantages in terms of future labor market outcomes. These results are consistent with respect to estimations with standard parametric methods. Economic and social policies aimed to prevent poor labor market performances, and possibly consequent social exclusion and immobility in adulthood, should also take into account the role of the various factors affecting family environment during childhood.

Keywords: family difficulties, childhood, propensity score matching, labour market outcomes, causal effects

JEL Classification: J12, J13, C21