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

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  • Duque, Valentina
  • Schmitz, Lauren L.

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.

Suggested Citation

  • Duque, Valentina & Schmitz, Lauren L., 2020. "The Influence of Early-life Economic Shocks on Long-term Outcomes: Evidence from the U.S. Great Depression," Working Papers 2020-11, University of Sydney, School of Economics.
    • Handle: RePEc:syd:wpaper:2020-11
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