Entry on the labor market and social beliefs: the impact of recessions

Do the economic conditions in which you grew up have an impact on beliefs and opinions about the economy? We all have notice how our grand-parents, having lived through the restrictions of the Great Depression or the Second World War, lived in a more thrifty way than us, never throwing away something. But could this experience also have an impact of beliefs about markets and social issues?

Paola Giuliano and Antonio Spilimbergo use the General Social Survey and exploit regional and chronological differences in economic conditions where respondents grew up to look at this question. They find that growing up in a recession makes you believe more that personal success is due to luck rather than effort, you support redistribution more but without believing government is there to help you. While should not be too surprising, how persistent such beliefs are is astonishing.

Now imagine that the current recession last longer than usual (some say there could be a double-dip) and this could plant the seeds of a profound change in the US. This country is the most capitalistic and the least relying on government at the moment. But attitudes could change over the next generation and indeed bring major reforms like public health care, more redistribution and more regulation of business as those in their formative years now experience (relative) hardship.