The long-term impact of family difficulties during childhood on labor market outcomes

The literature on child development shows that the promotion of cognitive and non-cognitive skills is essential to prevent inequalities in adult socioeconomic outcomes. In this context, the family environment plays a strategic role, as during childhood, it represents the most important institution for child development. This paper evaluates the long-term impact of various family difficulties during childhood on adult labor market outcomes. Evidence of negative impacts on employment probability and wages emerges from applying propensity score matching to the UK National Child Development Study. Simulation-based sensitivity analysis and standard parametric techniques support our findings. We also find that the intensity of the negative impact appears to increase with the number of recorded family difficulties, while the negative effect does not decline over the cohort’s working life. Moreover, we find that housing and economic (financial and unemployment) problems are responsible for the more serious disadvantages, while disabilities of family members and familial disharmony do not produce statistically negative impacts per se but tend to do so only if associated with other family difficulties, including economic and housing difficulties.