We study the mental health effects of early life exposure to paternal job loss. Using nationwide individual-level administrative register records, we focus on firm-closure-induced job losses for fathers with children below age five in the Netherlands. These children are more likely to take mental health-related medicines in their later childhood, and this increase is mainly driven by psychostimulant drugs. The increased uptake of psychostimulants ranges from 15 percent of mean uptake in the control group at age five to around 9 percent at age twelve. The effects are significantly larger for families with mothers being the main breadwinner, suggesting that the drop in paternal income resulting from displacement is not the main driver of psychostimulant uptake. We further find that the father is more likely to take mental health medication around the time of job loss and that the children exposed to paternal job loss are more likely to live in dissolved families. We find no evidence of exposed children living in neighborhoods with different rates of psychostimulant consumption compared to control children, while parents of treated children do report more impulsive behavior and inattention symptoms. These findings altogether indicate that differences in the diagnosis and/or prescription of psychostimulants across different neighborhoods or schools cannot explain our findings. Instead, our analyses suggest that within-household dynamics such as chaotic household environment is the most likely pathways leading to higher mental health medication usage among children exposed to early-life paternal job loss.
joint work with: Tom van Ourti and Pilar Garcia-Gomez