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Growing Up in a Recession: Beliefs and the Macroeconomy

  • Giuliano, Paola

    ()

    (University of California, Los Angeles)

  • Spilimbergo, Antonio

    ()

    (International Monetary Fund)

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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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:
Publication status: published Review of Economic Studies, April 2014, 81 (2), 787-817
Handle: RePEc:iza:izadps:dp4365
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