Working Paper: NBER ID: w27805
Authors: Vellore Arthi; John Parman
Abstract: How might COVID-19 affect human capital and wellbeing in the long run? The COVID-19 pandemic has already imposed a heavy human cost—taken together, this public health crisis and its attendant economic downturn appear poised to dwarf the scope, scale, and disruptiveness of most modern pandemics. What evidence we do have about other modern pandemics is largely limited to short-run impacts. Consequently, recent experience can do little to help us anticipate and respond to COVID-19’s potential long-run impact on individuals over decades and even generations. History, however, offers a solution. Historical crises offer closer analogues to COVID-19 in each of its key dimensions—as a global pandemic, as a global recession—and offer the runway necessary to study the life-course and intergenerational outcomes. In this paper, we review the evidence on the long-run effects on health, labor, and human capital of both historical pandemics (with a focus on the 1918 Influenza Pandemic) and historical recessions (with a focus on the Great Depression). We conclude by discussing how past crises can inform our approach to COVID-19—helping tell us what to look for, what to prepare for, and what data we ought to collect now.
Keywords: COVID-19; human capital; wellbeing; economic history; long-run impacts
JEL Codes: I1; I3; J1; J6; N1; N3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| COVID-19 (I15) | long-term impacts on human capital and wellbeing (I25) |
| 1918 influenza pandemic (N12) | adverse effects on health and economic outcomes (I14) |
| COVID-19 (I15) | scarring effects on income and employment prospects (J68) |
| Great Depression (G01) | long-term penalties in income and employment (J68) |
| economic downturn (F44) | lasting damage to health and income trajectories (I14) |
| lower socioeconomic groups (I14) | disproportionately affected by long-term impacts (I14) |