Economics

The Intergenerational Effects of Recessions

Department of Economics
Dr. Diana Alessandrini
Friday March 15, 2019    
3:00 pm
BAC 234

Existing studies show that recessions can have negative and long-lasting effects on current generations. We find that these effects extend to future generations. Recessions experienced by fathers even before their children were born have a non-trivial impact on offspring's intergenerational income mobility and adult labor market outcomes. By linking fathers and offspring from the Panel Study of Income Dynamics, we find that the timing of recessions is very important. Recessions experienced by male individuals before age 22 have a positive impact on their offspring's adult health, education, occupation, income and intergenerational mobility. On the contrary, recessions experienced by fathers after age 22 worsen offspring's outcomes. The positive impact of early recessions goes through father's education. Consistent with national trends, fathers who experienced a recession early in the life cycle have a higher educational attainment on average. This, in turn, improves offspring outcomes. The negative effect of recessions after age 22 is mainly due to the fact that these recessions reduce fathers' permanent income, which decreases investments in children's health and human capital. On average, fathers in our sample were 29 years old when they had their children, thus many of these recessions happened before children were born. Yet, they have important effects on offspring outcomes.

Dr. Diana Alessandrini is an Assistant Professor in the Department of Economics at St. Francis Xavier University (Canada) and a fellow of the Rimini Center for Economic Analysis (Italy).  Her research focuses on improving our understanding of business cycle dynamics and explores topics at the intersection of macroeconomics with labor economics and the economics of education.

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