# Early life shock and labour market outcomes: Panel data evidence from South Africa

## TL;DR

This study finds that losing a biological parent in early life in South Africa is linked to worse employment and wage outcomes, with stronger effects from losing a mother.

## Contribution

The paper provides new empirical evidence on how early life shocks affect labor market outcomes in South Africa using panel data.

## Key findings

- Loss of a biological mother is more strongly linked to lower employment and wages than loss of a father.
- Education is a key mediator of the impact of parental loss on labor outcomes.
- Black South Africans who lose a father show higher wages compared to other race groups under the same shock.

## Abstract

Adverse life events have short- and long-term effects on the livelihood of victims. This paper studies the effect of early life idiosyncratic shocks on labour market outcomes using five rounds of panel data from the National Income Dynamics Study (NIDS) of South Africa. Regression results from alternative panel data estimators suggest that the loss of biological parents early in life is negatively associated with the likelihood of employment and wage earnings. The association is stronger when one loses one's biological mother than one's biological father. Heterogeneity analysis reveals that the loss of a biological father among Black South Africans leads to higher wage earnings compared to other race groups who have experienced the same shock. Education level, perceived health, cognitive ability, and occupation type are strongly associated with the loss of a biological mother, while only education is associated with the loss of a father. These could be the main channels that mediate the link between early life loss of biological parents and labour market outcomes. Therefore, strengthening and aligning child support programmes to reach the victims are required.