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The Great Recession, Household Income, and Children’s Test Scores

Author

Listed:
  • Mark McGovern

    (Centre for Health Research at the Management School, Queen’s University Belfast. Centre of Excellence for Public Health)

  • Slawa Rokicki

    (Geary Institute for Public Policy, University College Dublin)

Abstract

The Great Recession had a major impact on the wellbeing and welfare of households worldwide. Irish data provide a unique opportunity to examine how the recession affected children’s educational performance given the extent of the economic contraction in Ireland during this period. We use longitudinal data from the Growing Up in Ireland study to examine the impact of changes in household income on standardised numerical and verbal test scores during the recession, when cohort members were aged between 9 and 13. We compare regression results from random effects and fixed effects models, the latter of which account for time invariant omitted variables that are potential common causes of both household income and academic performance. We also investigate non-linearities and effect heterogeneity using quantile regression. Log household income is strongly correlated with test scores in the random effects models: a unit decrease is associated with a reduction of 0.2 standard deviations in verbal and numerical test scores for boys and verbal scores for girls, and 0.1 standard deviations in numerical scores for girls. Quantile results suggest that, for boys, those with high ability are less affected. However, in the fixed effects models the coefficients are attenuated by more than 50%. Overall, there is little evidence of short-run negative effects of the Great Recession on children’s educational performance. In this paper we estimate the effect of transitory shocks; further data are required to isolate the impact of permanent income and any long-run impacts.

Suggested Citation

  • Mark McGovern & Slawa Rokicki, 2018. "The Great Recession, Household Income, and Children’s Test Scores," Working Papers 201815, Geary Institute, University College Dublin.
  • Handle: RePEc:ucd:wpaper:201815
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    References listed on IDEAS

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    1. Slawa Rokicki & Mark E. McGovern, 2020. "Heterogeneity in Early Life Investments: A Longitudinal Analysis of Children's Time Use," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(3), pages 647-676, September.

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    More about this item

    Keywords

    Human Capital; Test Scores; Inequality; Great Recession; Early Life Conditions; Fixed Effects; Quantile Panel Regression;
    All these keywords.

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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