Booms, Busts, and Life Decisions: How the Economy Shapes Our Health, Education, and Families

By Sofía Maier 

• Why do people stay in school longer during recessions? Why might economic growth reduce school attendance in poorer regions? And how do fertility and health respond when the economy swings up or down?

• These are the questions at the heart of my PhD thesis, which explores how individuals react to economic fluctuations ("booms and busts") across three fundamental dimensions of life: human capital, health, and fertility. While these links may seem intuitive, economic theory often gives ambiguous predictions. And empirical evidence is still limited, especially outside the United States and Europe.

• The research spans global, regional, and country-specific analyses. At the global level, I examine data from 168 countries between 1980 and 2015. The findings reveal clear patterns: education tends to rise in bad times (a counter-cyclical response) as young people choose to study when job opportunities dwindle. Health, on the other hand, improves with economic growth in many settings, particularly in low- and middle-income countries. Fertility patterns are more complex, but generally show pro-cyclical behavior, with higher birth rates during economic booms.

• Zooming into Europe, the analysis focuses on regional dynamics before and after the 2008 financial crisis. Here too, counter-cyclical patterns emerge: both education and health outcomes tend to deteriorate during economic upturns. Interestingly, innovation indicators like R&D investment follow similar trends, hinting at broader shifts in long-term productivity strategies.

• A closer look at European countries shows how youth unemployment acts as a powerful mechanism behind these trends. When job prospects are poor, young people (especially in middle-income EU countries) are more likely to stay in school, investing in their future while waiting for better times. These decisions are influenced not just by income constraints, but by expectations and perceived opportunity costs.

• Finally, a case study on Uruguay offers a micro-level perspective using more than 30 years of household survey data. The results are striking: during economic booms, school attendance drops, particularly among boys from lower-income families. This short-term response has long-term consequences; lower educational attainment years later, with clear implications for inequality and social mobility. In other words, even good times can leave scars if the right support systems aren’t in place.

• What emerges across all chapters is a consistent message: economic cycles don’t just affect markets; they shape life trajectories. And their effects are not evenly spread. Gender, age, income, and geography all play a role in how people respond. Understanding these responses is crucial for designing effective policies, especially when it comes to protecting vulnerable groups during booms as well as busts.

• In the end, this research is a call for better-designed safety nets, smarter educational incentives, and more attention to how short-term shocks can ripple through people’s lives for decades. The economy may be cyclical, but its consequences don’t have to be.