The Lasting Well-being Effects of Early Adulthood Macroeconomic Crises

Abstract

This paper studies the effects of macroeconomic crises experienced in early adulthood on subjective well-being later in life. Using repeated cross sectional survey data of over 100 000 individuals from 38 countries around the world combined with historical data on macroeconomic circumstances, I find that having experienced a macroeconomic crisis at ages 18 to 25 is detrimental to subjective well-being. This result is in line with earlier literature that focuses on other individual-level outcomes. However, the analysis presented in this paper reveals that outcomes related to individual’s earnings, employment status, family life, and religion cannot fully explain the lasting effect of a macroeconomic crises on well-being. Results on heterogeneous responses show that the negative effect is largest for females and for individuals with low educational attainment.