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Human Capital and Shocks Evidence on Education, Health, and Nutrition

Human Capital and Shocks Evidence on Education, Health, and Nutrition

Chapter:
(p.23) 1 Human Capital and Shocks Evidence on Education, Health, and Nutrition
Source:
The Economics of Poverty Traps
Author(s):
Elizabeth FrankenbergDuncan Thomas
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226574448.003.0002

Human capital has played a key role in the poverty traps literature. Economic shocks affecting human capital during early life may permanently reduce levels of human capital and push individuals into poverty. Three concerns in this literature are explored with empirical evidence drawn from primary longitudinal survey data collected before and after two major shocks in Indonesia: the 1998 financial crisis and the 2004 Indian Ocean tsunami. First, it is hard to identify shocks that are unanticipated and uncorrelated with other factors that affect human capital outcomes. Second, focusing on child health and human capital, we document that individuals, families, and communities invest in strategies designed to mitigate such shocks. The nature and effectiveness of these behaviors vary with the context in ways that are difficult to measure or model. Third, shocks' effects on child human capital outcomes in the short and longer-term may differ precisely because of the behavioral changes of individuals and their families so that drawing inferences about longer-term impacts based on negative short-term impacts can be misleading. The picture of resilience that emerges from investigating the impacts of major shocks on child health and human capital in the face of these two major shocks is stunning.

Keywords:   education, health, nutrition, early life, financial crisis, natural disaster, Indonesia

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