The Influence of Early-life Economic Shocks on Long-term Outcomes: Evidence from the U.S. Great Depression

press release: Assistant Professor Lauren Schmitz, who joined the La Follette School faculty in fall 2019, will discuss her research about how physical health, psychological wellbeing, and productivity around retirement age varies with exposure to economic conditions in early life.

Using state-year-level variation from the most severe and prolonged economic downturn in U.S. history -- the Great Depression -- combined with restricted micro-data from the Health and Retirement Study, Schmitz and colleagues find that changes in employment at the year-of-birth induced significant changes in economic wellbeing, metabolic syndrome, depressive symptoms, and limitations in performing activities of daily living around age 60.

The researchers show that these effects are not driven by endogenous responses throughout the 1930s and that they likely represent lower bound estimates of the true impacts. The findings of their paper have important implications for the design of retirement and healthcare systems and for assessing the costs of business cycles.