Does intelligence shield children from the effects of parental non-employment?

Abstract

Current literature offers several potential channels through which jobless parents can affect children. In this paper, I provide new evidence based on variation across intelligence of children. The results suggest that loss of human capital investments into children is the driving mechanism. I find that gap in education widens with higher intelligence, while the gap in labour-market outcomes narrows. I rationalise these findings using the skill formation and employer learning theories.