Growing Up in a Recession

PWP-CCPR-2010-056

Abstract

Do generations growing up during recessions have different socio-economic beliefs than generations growing up in good times? We study the effects of experiencing a recession when young on individuals’ 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 support more government redistribution, but are less confident in public institutions. Moreover, we find that recessions have a long-lasting effect on individuals’ beliefs.