Growing Up in a Recession: Beliefs and the Macroeconomy

42 Pages Posted: 18 Aug 2009  

Paola Giuliano

University of California, Los Angeles (UCLA) - Anderson School of Management; IZA Institute of Labor Economics

Antonio Spilimbergo

International Monetary Fund (IMF) - Research Department; Centre for Economic Policy Research (CEPR); University of Michigan at Ann Arbor - The William Davidson Institute

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Abstract

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.

Keywords: beliefs formation, macroeconomic shocks

JEL Classification: P16, E60, Z13

Suggested Citation

Giuliano, Paola and Spilimbergo, Antonio, Growing Up in a Recession: Beliefs and the Macroeconomy. IZA Discussion Paper No. 4365. Available at SSRN: https://ssrn.com/abstract=1455527

Paola Giuliano

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Antonio Spilimbergo (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-6346 (Phone)
202-623-6336 (Fax)

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

University of Michigan at Ann Arbor - The William Davidson Institute ( email )

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

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