Thursday, November 6, 2014
Taos (Convention Center)
*Names in bold indicate Presenter
A growing literature in economics documents that in-utero shocks affect individuals’ human capital in later life. Most of this evidence focuses on extreme health shocks, however. We are the first to document how less severe but more pervasive economic crises experienced during childhood affect adult economic outcomes. To do this, we assemble a unique dataset that links adults in the American Community Survey with historical business cycle indicators. Identification comes from variation in economic conditions across cohorts defined by state and year of birth. Unlike the existing literature, we find little evidence that individuals exposed to poor economic conditions in early childhood suffer long-term economic consequences. These findings suggest that 1) more “typical” variation experienced by children is of minimal importance, and 2) well documented relationships between business cycle conditions and contemporaneous adult outcomes do not spill over onto children in ways that have long lasting impact.