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Choosing a Control Group for Displaced Workers.

Industrial & labor relations review·2018
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Parental Proximity and Earnings after Job Displacements.

Pawel Krolikowski1, Mike Zabek2, Patrick Coate3

  • 1Federal Reserve Bank of Cleveland, 1455 E 6th St, Cleveland, OH 44114.

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|July 30, 2020
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Summary

Young adults whose jobs are displaced recover earnings fully when living near parents, benefiting from childcare support and networks. Those living farther away experience permanent earnings decline, highlighting the importance of proximity for career recovery.

Keywords:
J61J64ParentsR23adult childrenchildcarefamily tiesjob losstransfers

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Area of Science:

  • Labor Economics
  • Sociology
  • Demography

Background:

  • Job displacement significantly impacts young adults' long-term earnings.
  • Geographic proximity to parental support systems may mitigate negative economic shocks.
  • Understanding factors influencing post-displacement earnings recovery is crucial for economic policy.

Purpose of the Study:

  • To investigate the effect of geographic proximity to parents on young adults' earnings recovery after job displacement.
  • To identify mechanisms, such as childcare support and social networks, linking proximity to earnings outcomes.
  • To analyze variations in earnings recovery based on state-level childcare costs and occupational flexibility.

Main Methods:

  • Analysis of longitudinal data on young adults experiencing job displacement.
  • Comparison of earnings trajectories for individuals living near versus far from their parents.
  • Econometric modeling to control for confounding factors like job search duration and mobility.

Main Results:

  • Young adults living in their parents' neighborhoods experienced full earnings recovery post-displacement.
  • Individuals living farther away showed permanent earnings declines.
  • Benefits were more pronounced in areas with high childcare costs and for workers in inflexible occupations.

Conclusions:

  • Proximity to parental support is a critical factor in young adults' economic resilience after job loss.
  • Childcare assistance and parental employment networks play significant roles in facilitating earnings recovery.
  • Policy interventions supporting geographic co-residence or facilitating access to similar support could enhance labor market outcomes for displaced workers.