This study explores the association between parental unemployment and child health outcomes using data from the UK Household Longitudinal Study (UKHLS). We examine maternal and paternal unemployment in relation to children’s socio-emotional development, long-standing conditions, and perceived health at ages 3, 5, and 8. Three pathways—household poverty, parental mental health, and time investment—are considered as potential mechanisms underlying these associations. To address selection bias, we apply propensity score matching with nearest-neighbour matching to estimate the Average Treatment Effect (ATE) of unemployment. The findings indicate significant associations between paternal unemployment and adverse socio-emotional development in children, as measured by the Strengths and Difficulties Questionnaire (SDQ) at ages 5 and 8. Paternal unemployment is consistently associated with poorer non-cognitive outcomes compared to maternal unemployment, which may reflect the economic dependence on paternal income and traditional gender roles within the household. Maternal unemployment shows a weaker association with perceived child health at age 5, pointing to potential gender-based differences in these relationships.

Mechanism analysis suggests that poverty and parental mental health partially explain the observed associations. Household poverty appears to strengthen the link between paternal unemployment and higher SDQ scores, while parental mental health issues, commonly accompanying unemployment, are associated with worsened child socio-emotional outcomes.

This study highlights the relevance of economic stability in households with young children and suggests that policies addressing financial support, mental health services, and positive parental involvement could reduce the adverse health implications for children in economically vulnerable families. The findings provide valuable insights for policymakers aiming to address health disparities among children in low-income households.