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Title page 1

Contents 1

Abstract 3

1. Introduction 4

1.1. Mechanisms 7

2. Data and Institutional Framework 8

3. Methodology 13

4. Results 15

5. Heterogeneity and Mechanisms 19

6. Discussion 23

References 26

A. Appendix 29

Tables 17

Table 1. First-Stage: The impact of the Placebo 2004 Labor Reform on Job Security 17

Table 2. The impact of Parental Job Security on Children's Health 18

Table 3. Heterogeneity of the Effect of Job Security on Children's Health by Children's Gender and Age 20

Table 4. The effect of Parental Job Security on Children's Sleep, Sport and Dietary Habits 21

Table 5. The impact of Parental Entitlement to the Secure Labor Contract Subsidy on Children's Health 22

Table 6. The impact of Parental Job Security on the Probability of Having a Child 23

Table 7. The impact of Parental Job Security on Children's Health. Only children born after 2006 24

Table 8. Descriptive Statistics 29

Table 9. Descriptive Statistics 30

Table 10. First-Stage: The impact of the 2006 Labor Reform on Job Security Excluding the Regions Most affected by the 2008's Economic Crisis 32

Table 11. The impact of Parental Job Security on Children's Health Controlling for Regional Unemployment Rate 32

Table 12. The effect of Job Security on Adult's Health 33

Table 13. The effect of Parental Job Security on Children's Accidents and Health Access 33

Table 14. The effect of Parental Job Security on Children's Weight 34

Table 15. The effect of Parental Job Security on Children's Consumption of Medication 34

Figures 12

Figure 1. Number of Secure Labour Contracts 12

Figure 2. First-Stage: The impact of the 2006 Labor Reform on Job Security 16

Figure 3. First-Stage: The impact of the 2006 Labor Reform on Job Security 31

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Dual labor markets are characterized by a group of workers with permanent jobs and a stable income source and another group with short-term contracts who suffer from income uncertainty and employment volatility. These differences in job security translate into several spheres of these workers’ lives, with potential implications for families’ well-being.

This paper analyzes the causal effect of parental job security on children’s health. To address endogeneity, we exploit a reform that incentivized secure labor contracts for young (under 30) and female workers in Spain by reducing payroll taxes paid by employers.

Using data from several waves of the Spanish National Health Survey and combining Instrumental Variables and Differences-in-Differences methods, we find that having a secure labor contract increases the probability that children are in good or very good health by 20%.

We also document some mechanisms, such as reductions in children’s accidents, increases in the frequency of physical activity, and a more protein-intense diet.