Can Municipalities Mitigate the Effects of Parental Job Loss on Children’s Mental Health? Evidence from Swedish Register Data.

Natalia Andreeva, Umea University
Anna Baranowska-Rataj , Umeå University
Xavier De Luna, Umea University

Parental job losses have detrimental consequences for the mental health of children. To understand the buffering role of social policies, previous studies examined how the magnitude of these negative effects varies across countries with divergent social policies. However, little is known about the protective role of policies implemented by local authorities, namely municipalities. This study investigates whether municipal spending on elementary schools can moderate the adverse effects of parental job loss on children’s mental health. Additionally, we explore what the type of municipal expenditures plays a particularly protective role. Analyses are based on Swedish register data linked with the overall municipal expenditures on elementary education, as well as more specific indicators such as expenditures on after-school centers and proportions of qualified teachers. To reduce bias from unobserved factors that may affect both parental labour market outcomes and children’s mental health, we focus on children whose parents experienced job displacements due to plant closures. Our analyses make use of state-of-the-art machine learning methods, specifically, a causal forest algorithm that accounts for the municipality cluster structure of the data. Our findings reveal that higher municipal spending on elementary schools reduces the negative mental health effects of parental job loss. Our further analyses show that while these moderating effects could be potentially driven by the quality of services provided at after-school centres. Overall, our results underscore the importance of educational policy implemented in the local contexts in shaping families’ resilience to socioeconomic shocks.

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 Presented in Session P7. Education, Labor Market, and Economic Issues