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Crossover effects of parental unemployment on wellbeing of children attract growing attention in research on social inequalities. Recent economic crises call for identifying policies that mitigate the adverse effects of unemployment. Building on the theoretical insights from Capability Approach, we examine the relationship between parental unemployment and wellbeing of adolescents across countries with different educational policies. We use multilevel modelling and microdata on economic and subjective wellbeing of household members from the European Union Statistics on Income and Living Conditions (EU-SILC). We combine microdata on 45,992 adolescents in 32 countries with macro-level indicators of educational policies.

We find that parental unemployment is associated with lower adolescent wellbeing, but the magnitude of this association varies depending on access to financial support for participation in education. Adolescents who receive educational allowances and who live in countries with broader access to such support are less harmed by parental unemployment.