The Great Recession, Household Income, and Children's Test Scores

Abstract

AbstractEconomic downturns may have important implications for the educational attainment and human capital accumulation of children. We examine how income losses during the Great Recession were associated with children's educational performance in Ireland, one of the countries most severely affected by the global financial crisis. Using longitudinal data from a nationally representative child cohort study, collected before and after the recession at ages 9 and 13 years, we estimate panel models to examine the impact of income changes on standardized tests. We explore both objective and subjective measures of recession impact, and investigate non‐linearities and effect heterogeneity using quantile regression. While income is strongly associated with educational performance overall, there is little evidence of a short‐run negative impact of income shocks during the Great Recession on children's test scores.