2026-07-01http://hdl.handle.net/123456789/414382Do aggregate economic shocks, such as those caused by macroeconomic crises or droughts, reduce child human capital? The answer to this question has important implications for public policy. If shocks reduce investments in children, they may transmit poverty from one generation to the next. This paper uses a simple framework to analyze the effects of aggregate economic shocks on child schooling and health. It shows that the expected effects are ambiguous, because of a tension between income and substitution effects. The paper then reviews the recent empirical literature on the subject. In richer countries, like the United States, child health and education outcomes are counter-cyclical: they improve during recessions. In poorer countries, mostly in Africa and low-income Asia, the outcomes are pro-cyclical: infant mortality rises, and school enrollment and nutrition fall during recessions. In the middle-income countries of Latin America, the picture is more nuanced: health outcomes are generally pro-cyclical, and education outcomes counter-cyclical. Each of these findings is consistent with the simple conceptual framework. The paper discusses possible implications for expenditure allocation.application/pdftext/plainCC BY 3.0 IGOhttp://creativecommons.org/licenses/by/3.0/igo/World BankABSENTEEISMACCOUNTINGADOLESCENTSADULT HEALTHADULT MORTALITYAGEDAIR POLLUTIONBABIESBREASTFEEDINGBULLETINCAPITAL INVESTMENTSCDCHILD CARECHILD HEALTHCHILD LABORCHILD MORTALITYCHILD NUTRITIONCHILD SURVIVALCIVIL WARCONSUMPTION LEVELSCRISESCULTURAL CHANGEDEMAND CURVEDEPRESSIONDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDISASTERSDISCOUNT RATEDISEASESEARLY CHILDHOODECONOMETRIC ANALYSISECONOMIC CONDITIONSECONOMIC CRISESECONOMIC DOWNTURNSECONOMIC FLUCTUATIONSECONOMICSECONOMICS OF EDUCATIONEDUCATED WOMENEDUCATIONAL ATTAINMENTELDERLYEPIDEMIOLOGYESSENTIAL COMMODITIESEXPECTED RETURNSEXPECTED VALUEEXPENDITURESEXTERNALITIESFAMILIESFAMILY MEMBERSFERTILITYFINANCIAL CRISISFINANCIAL SECTORFUTURE RESEARCHGDPGDP PER CAPITAGENDER DIFFERENCESGROWTH RATEHEALTH CAREHEALTH ECONOMICSHEALTH EFFECTSHEALTH IMPACTSHEALTH INDICATORSHEALTH INVESTMENTSHEALTH OUTCOMESHEALTH SECTORHEALTH SERVICEHEALTH SERVICE UTILIZATIONHEALTH SERVICESHEALTH STATUSHEALTH STRATEGYHOUSEHOLD INCOMEHOUSEHOLD SIZEHOUSEHOLD SURVEYSHUMAN CAPITALHUMAN DEVELOPMENTHUMAN RESOURCESHYGIENEILLITERACYILLNESSIMPACT ON HEALTHINCOME EFFECTINCOME LEVELSINFANTINFANT DEATHSINFANT MORTALITYINFANT MORTALITY RATEINFANT MORTALITY RATESINTEREST RATEINTERNATIONAL JOURNAL OF EPIDEMIOLOGYINTERVENTIONINVESTMENTS IN EDUCATIONLABOR MARKETLABOR PRODUCTIVITYLAMLATIN AMERICANLEVELS OF CONSUMPTIONLIVE BIRTHSLIVING STANDARDSLOW BIRTH WEIGHTMACROECONOMIC EVENTSMALARIAMARGINAL PRODUCTMARGINAL PRODUCTIVITYMARGINAL UTILITYMEDICINESMENTALMENTAL HEALTHMORBIDITYMORTALITYMOSQUITO NETSMOTHERNATURAL DISASTERSNEGATIVE EXTERNALITIESNUMBER OF CHILDRENNUTRITIONNUTRITIONAL STATUSOBESITYOLDER AGE GROUPSOPPORTUNITY COSTPACIFIC REGIONPARENTINGPEDIATRICSPER CAPITA INCOMEPLACE OF RESIDENCEPOLICY IMPLICATIONSPOLICY RESEARCHPOLICY RESEARCH WORKING PAPERPOLITICAL ECONOMYPOLLUTIONPOOR HOUSEHOLDSPOOR PEOPLEPOPULATION CENSUSPOPULATION GROUPSPOSITIVE EFFECTSPREGNANCYPREGNANT WOMENPRENATAL CAREPREVENTIVE HEALTH CAREPRICE FLUCTUATIONSPRICE INCREASESPRIMARY SCHOOLPRIMARY SCHOOL AGEPRIMARY SCHOOLINGPROBABILITYPRODUCTION FUNCTIONPROGRESSPUBLIC EDUCATIONPUBLIC HEALTHPUBLIC HEALTH EXPENDITURESPUBLIC HEALTH SPENDINGPUBLIC POLICYPUBLIC SERVICESQUALITY OF EDUCATIONREAL WAGESRECESSIONRICHER COUNTRIESRURAL AREASSAFETYSAFETY NETSSCHOOL ATTENDANCESCHOOL QUALITYSCHOOL YEARSECONDARY SCHOOLSECONDARY SCHOOLINGSERVICE UTILIZATIONSKILLED WORKERSSMOKINGSOCIOECONOMIC STATUSSTATE UNIVERSITYSUB-SAHARAN AFRICASUBSTITUTION EFFECTTEACHER SALARIESUNEMPLOYMENTUNEMPLOYMENT RATEURBAN AREASUTILITY FUNCTIONUTILITY MAXIMIZATIONVULNERABILITYVULNERABLE GROUPSWAGESWEALTHWORKERSWORKFORCEYOUNG ADULTSYOUNG CHILDREN