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Growing Up in a Recession: Beliefs and the Macroeconomy

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Author Info

  • Giuliano, Paola

    ()
    (University of California, Los Angeles)

  • Spilimbergo, Antonio

    ()
    (International Monetary Fund)

Abstract

Do generations growing up during recessions have different socio-economic beliefs than generations growing up in good times? We study the relationship between recessions and beliefs by matching macroeconomic shocks during early adulthood with self-reported answers from the General Social Survey. Using time and regional variations in macroeconomic conditions to identify the effect of recessions on beliefs, we show that individuals growing up during recessions tend to believe that success in life depends more on luck than on effort, support more government redistribution, but are less confident in public institutions. Moreover, we find that recessions have a long-lasting effect on individuals' beliefs.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4365.

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Length: 42 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4365

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Keywords: beliefs formation; macroeconomic shocks;

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References

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  1. Rafael Di Tella & Sebastian Galiani & Ernesto Schargrodsky, 2007. "The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters," The Quarterly Journal of Economics, MIT Press, vol. 122(1), pages 209-241, 02.
  2. Alberto Alesina & Dani Rodrik, 1991. "Distributive Politics and Economic Growth," NBER Working Papers 3668, National Bureau of Economic Research, Inc.
  3. Ulrike Malmendier & Stefan Nagel, 2009. "Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?," NBER Working Papers 14813, National Bureau of Economic Research, Inc.
  4. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
  5. Piketty, Thomas, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 551-84, August.
  6. Alberto Alesina & Nicola Fuchs-Schundeln, 2005. "Good bye Lenin (or not?): The effect of Communism on people's preferences," Harvard Institute of Economic Research Working Papers 2076, Harvard - Institute of Economic Research.
  7. Corneo, Giacomo & Grüner, Hans Peter, 2001. "Individual Preferences for Political Redistribution," CEPR Discussion Papers 2694, C.E.P.R. Discussion Papers.
  8. Jean Tirole & Roland Benabou, 2004. "Belief in a Just World and Redistributive Politics," 2004 Meeting Papers 15, Society for Economic Dynamics.
  9. Robert J. Shiller & Maxim Boycko & Vladimir Korobov, 1990. "Popular Attitudes Towards Free Markets: The Soviet Union and the United States Compared," Cowles Foundation Discussion Papers 952, Cowles Foundation for Research in Economics, Yale University.
  10. Murthi, Mamta & Tiongson, Erwin R., 2008. "Attitudes to equality : the"socialist legacy"revisited," Policy Research Working Paper Series 4529, The World Bank.
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  14. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
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  16. Wolfers, Justin, 2003. "Is Business Cycle Volatility Costly? Evidence from Surveys of Subjective Well-Being," International Finance, Wiley Blackwell, vol. 6(1), pages 1-26, Spring.
  17. Robert J. Shiller & Maxim Boycko & Vladimir Korobov, 1992. "Hunting for Homo Sovieticus: Situational versus Attitudinal Factors in Economic Behavior," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 127-194.
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  19. Oreopoulos, Philip & Wachter, Till von & Heisz, Andrew, 2008. "The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates," IZA Discussion Papers 3578, Institute for the Study of Labor (IZA).
  20. Greenwood, Robin & Nagel, Stefan, 2009. "Inexperienced investors and bubbles," Journal of Financial Economics, Elsevier, vol. 93(2), pages 239-258, August.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Entry on the labor market and social beliefs: the impact of recessions
    by Economic Logician in Economic Logic on 2009-09-23 14:19:00
  2. Recessioner sätter mentala spår
    by nonicoclolasos in Nonicoclolasos on 2009-08-26 06:23:02
  3. Should you come out of college this year?
    by ? in SCSUScholars on 2010-01-12 01:41:00
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