Adverse Childhood Shocks and Human Capital Formation: Evidence from the Timing of Parental Deaths

Abstract:

How does the timing of adverse shocks affect human capital accumulation in childhood? Using administrative data from the Netherlands, I shed new light on this question by estimating the causal effects of parental deaths on educational attainment by age of the child at the time of the parental death. Exploiting variation in the age at which children experience a parental death, I find that on average for every three to four years that a parental death occurs earlier in the child's life, the probability of college enrollment by age 21 drops 1 percentage point. However, there seems to be an important interaction between the parental death shock and the Dutch educational system: especially parental deaths that occur prior to high school tracking have a substantial negative effect on the probability that a child will eventually attend college. Moreover, there are considerable gender differences: while sons are similarly affected by maternal and paternal deaths, daughters experience large negative effect for maternal death but not for paternal deaths. I distinguish the causal age-effects of parental deaths from confounding factors by (i) accounting for cause of death fixed effects, (ii) focusing on a subset of unexpected accidents, for which selection effects arguably do not vary with the child's age at the time of parental death, and (iii) comparing outcomes of siblings within families.