The Effect of Household Earnings on Child School Mental Health Designations: Evidence from Administrative Data

We investigate the impact of household earnings shocks on in-school mental health designations in the context of the Great Recession using propensity score matching and a unique data set of linked administrative educational and tax data. Relative to children who did not experience recessionary earnings losses, the rate of new mental health designations among children with earnings losses was 0.5 percentage points higher (20 percent) during the recession. The effect of experiencing a recessionary earnings loss is persistent and grows, especially among children who experienced the loss when they were aged 10 or younger.