Parental employment shocks and children’s labor market outcomes: evidence from Vietnam

Parental employment shocks have been widely studied globally but remain underexplored in Vietnam. This study provides the first evidence on how employment shocks experienced by household heads influence children’s labor market outcomes in the country. We distinguish between two types of shocks, unemployment and inactivity, and examine their effects across age groups (adolescents versus adult children), family structures (dual-parent versus single-parent households), and forms of children’s labor force participation (employment, self-employment, and unemployment). Focusing on the first two years of the COVID-19 pandemic, we find that employment shocks experienced by household-headed fathers are positively associated with children’s transitions from inactivity to labor force participation in certain specifications. In contrast, employment shocks affecting household-headed mothers show no significant effects for daughters, but are significantly associated with some forms of sons’ labor force participation.