Income shocks reduce human capital investments : evidence from five east European countries
This paper empirically investigates whether households affected by income shocks cope by reducing human capital investments. The analysis uses Crisis Response Surveys conducted in Armenia, Bulgaria, Montenegro, Romania, and Turkey during 2009 and 2010. A propensity score matching technique is adopted to compare health and education investment decisions among households that were affected by income shocks to the matched comparison group. The authors find that households affected by income shocks reduced some human capital investments. Interestingly, households in these five countries were more likely to adopt health-related coping strategies as opposed to education-related coping strategies. The results from Armenia, Bulgaria, Montenegro, and Turkey show that households affected by income shocks reduced their visits to doctors and reduced their spending on medicine and medical care significantly more than the matched comparison group. Households affected by income shocks reduced their education investments, but did not adopt harmful education-related coping strategies, such as withdrawing children from schools or moving children from costly private to cheaper public schools. These findings reveal that long-term and possibly intergenerational household welfare could be affected by short-run income shocks and hence underscore the need for governments to employ mitigation measures.
|Date of creation:||01 Dec 2011|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Case, Anne & Fertig, Angela & Paxson, Christina, 2005. "The lasting impact of childhood health and circumstance," Journal of Health Economics, Elsevier, vol. 24(2), pages 365-389, March.
- Christina Paxson & Norbert Schady, 2005.
"Child Health and Economic Crisis in Peru,"
World Bank Economic Review,
World Bank Group, vol. 19(2), pages 203-223.
- World Bank, 2011. "The Jobs Crisis : Household and Government Responses to the Great Recession in Eastern Europe and Central Asia," World Bank Publications, The World Bank, number 2287, April.
- Suzanne Duryea, 1998.
"Children's Advancement Through School in Brazil: The Role of Transitory Shocks to Household Income,"
Research Department Publications
4124, Inter-American Development Bank, Research Department.
- Suzanne Duryea, 1998. "Children's Advancement Through School in Brazil: The Role of Transitory Shocks to Household Income," IDB Publications (Working Papers) 5679, Inter-American Development Bank.
- Lokshin, Michael M. & Yemtsov, Ruslan, 2001. "Household strategies for coping with poverty and social exclusion in post-crisis Russia," Policy Research Working Paper Series 2556, The World Bank.
- Sarah Baird & Jed Friedman & Norbert Schady, 2011.
"Aggregate Income Shocks and Infant Mortality in the Developing World,"
The Review of Economics and Statistics,
MIT Press, vol. 93(3), pages 847-856, August.
- Sarah Baird & Jed Friedman & Norbert Schady, 2009. "Aggregate Income Shocks and Infant Mortality in the Developing World," Working Papers 2010-07, The George Washington University, Institute for International Economic Policy.
- Hanan G. Jacoby & Emmanuel Skoufias, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 311-335.
- Thomas, Duncan & Beegle, Kathleen & Frankenberg, Elizabeth & Sikoki, Bondan & Strauss, John & Teruel, Graciela, 2004. "Education in a crisis," Journal of Development Economics, Elsevier, vol. 74(1), pages 53-85, June.
- Sascha O. Becker & Marco Caliendo, 2007.
"Sensitivity analysis for average treatment effects,"
StataCorp LP, vol. 7(1), pages 71-83, February.
- Sascha O. Becker & Marco Caliendo, 2007. "mhbounds - Sensitivity Analysis for Average Treatment Effects," Discussion Papers of DIW Berlin 659, DIW Berlin, German Institute for Economic Research.
- Becker, Sascha O. & Caliendo, Marco, 2007. "mhbounds – Sensitivity Analysis for Average Treatment Effects," IZA Discussion Papers 2542, Institute for the Study of Labor (IZA).
- Aakvik, Arild, 2001.
" Bounding a Matching Estimator: The Case of a Norwegian Training Program,"
Oxford Bulletin of Economics and Statistics,
Department of Economics, University of Oxford, vol. 63(1), pages 115-43, February.
- Aakvik, A., 1999. "Bounding a Marching Estimator: the Case of a Norwegian Training Program," Norway; Department of Economics, University of Bergen 0499, Department of Economics, University of Bergen.
- Aakvik, A., 2001. "Bounding a Matching Estimator: The Case of a Norwegian Training Program," Norway; Department of Economics, University of Bergen 222, Department of Economics, University of Bergen.
- Ferreira, Francisco H. G. & Schady, Norbert, 2008. "Aggregate economic shocks, child schooling and child health," Policy Research Working Paper Series 4701, The World Bank.
- Lisa A. Cameron, 2001.
"The Impact of the Indonesian Financial Crisis on Children: An analysis using the 100 villages data,"
inwopa01/10, Innocenti Working Papers.
- Lisa Cameron, 2001. "The Impact Of The Indonesian Financial Crisis On Children: An Analysis Using The 100 Villages Data," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(1), pages 43-64.
- McKenzie, David J., 2003. "How do Households Cope with Aggregate Shocks? Evidence from the Mexican Peso Crisis," World Development, Elsevier, vol. 31(7), pages 1179-1199, July.
- Emmanuel Skoufias & Susan Parker, 2006. "Job loss and family adjustments in work and schooling during the Mexican peso crisis," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(1), pages 163-181, February.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:5926. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.