The Influence of Early-life Economic Shocks on Long-term Outcomes: Evidence from the U.S. Great Depression

Valentina Duque and Lauren L. Schmitz

No 2020-11, Working Papers from University of Sydney, School of Economics

Abstract: We show that health and productivity around retirement age, and earnings over the life cycle, vary with exposure to economic conditions in early life. Using state-year-level variation from the most severe and prolonged economic downturn in American history—the Great Depression—combined with restricted micro-data from the Health and Retirement Study, we find that changes in macroeconomic indicators before age 6 are associated with changes in economic well-being, earnings, metabolic syndrome, and physical limitations decades later. We also document large declines in long-term mortality. Results are not driven by endogenous fertility responses throughout the 1930s. Our results help inform the design of retirement and healthcare systems and the long-term costs of business cycles.

Keywords: Human Capital; Poverty; Unemployment; Aging (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-age, nep-hea and nep-his
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