Local Mass Layoffs and Juvenile Delinquency

Abstract

This paper is motivated by two broad important facts: (1) A vast body of research shows that juvenile delinquency has long-run consequences (e.g., adverse school and labor market outcomes) and (2) parents’ economic and financial conditions affect children's outcomes. Yet, there is limited causal evidence on the impact of adults’ joblessness on juvenile delinquency. To fill this gap, the authors utilize county-level unexpected layoff events to assess their impact on youth delinquency behavior and identify the channels through which this relationship is exerted. Using fixed-effect estimates, the authors find that adult male joblessness heightens a broad array of juvenile delinquency incidences. The observed effect is mainly driven by nonmetropolitan counties with low unemployment insurance replacement rates, large female-male wage gaps, high child poverty rates, and low social capital. The findings have implications for policies that support youth, improve job security, and curb inhibiting labor demand factors that affect the stability of families.