Aggregate Economic Shocks, Child Schooling and Child Health

43 Pages Posted: 20 Apr 2016

See all articles by Francisco H. G. Ferreira

Francisco H. G. Ferreira

World Bank - Development Research Group (DECRG)

Norbert Schady

World Bank - Development Research Group

Multiple version iconThere are 2 versions of this paper

Date Written: August 1, 2008

Abstract

Do aggregate economic shocks, such as those caused by macroeconomic crises or droughts, reduce child human capital? The answer to this question has important implications for public policy. If shocks reduce investments in children, they may transmit poverty from one generation to the next. This paper uses a simple framework to analyze the effects of aggregate economic shocks on child schooling and health. It shows that the expected effects are ambiguous, because of a tension between income and substitution effects. The paper then reviews the recent empirical literature on the subject. In richer countries, like the United States, child health and education outcomes are counter-cyclical: they improve during recessions. In poorer countries, mostly in Africa and low-income Asia, the outcomes are pro-cyclical: infant mortality rises, and school enrollment and nutrition fall during recessions. In the middle-income countries of Latin America, the picture is more nuanced: health outcomes are generally pro-cyclical, and education outcomes counter-cyclical. Each of these findings is consistent with the simple conceptual framework. The paper discusses possible implications for expenditure allocation.

Keywords: Health Monitoring & Evaluation, Population Policies, Economic Theory & Research, Health Systems Development & Reform, Labor Policies

Suggested Citation

Ferreira, Francisco H. G. and Schady, Norbert, Aggregate Economic Shocks, Child Schooling and Child Health (August 1, 2008). World Bank Policy Research Working Paper No. 4701, Available at SSRN: https://ssrn.com/abstract=1258146

Francisco H. G. Ferreira (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-4382 (Phone)

Norbert Schady

World Bank - Development Research Group ( email )

1818 H Street NW
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/nschady

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
367
Abstract Views
1,894
Rank
148,889
PlumX Metrics