Growing Up in a Recession: Beliefs and the Macroeconomy

45 Pages Posted: 8 Sep 2009 Last revised: 9 Oct 2009

See all articles by Paola Giuliano

Paola Giuliano

University of California, Los Angeles (UCLA) - Anderson School of Management; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); 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

Multiple version iconThere are 3 versions of this paper

Date Written: September 2009

Abstract

Does the historical macroeconomic environment affect preferences for redistribution? We find that individuals who experienced a recession when young believe that success in life depends more on luck than effort, support more government redistribution, and tend to vote for left-wing parties. The effect of recessions on beliefs is long-lasting. We support our findings with evidence from three different datasets. First, we identify the effect of recessions on beliefs exploiting time and regional variation in macroeconomic conditions using data from the 1972–2010 General Social Survey. Our specifications control for nonlinear time-period, life-cycle, and cohort effects, as well as a host of background variables. Second, we rely on data from the National Longitudinal Survey of the High School Class of 1972 to corroborate the age-period-cohort specification and look at heterogeneous effects of experiencing a recession during early adulthood. Third, using data from the World Value Survey, we confirm our findings with a sample of 37 countries whose citizens experienced macroeconomic disasters at different points in history.

Suggested Citation

Giuliano, Paola and Spilimbergo, Antonio, Growing Up in a Recession: Beliefs and the Macroeconomy (September 2009). NBER Working Paper No. w15321. Available at SSRN: https://ssrn.com/abstract=1469116

Paola Giuliano (Contact Author)

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

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National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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IZA Institute of Labor Economics

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Antonio Spilimbergo

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

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

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

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Wyly Hall
Ann Arbor, MI 48109-1234
United States

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