Published: October 10, 2018

Download: Life Course Centre Working Paper: 2018-20


Melisa Bubonya, Deborah A. Cobb-Clark, Daniel Christensen, Sarah E. Johnson, and Stephen R. Zubrick.

Non-Technical Summary:

The onset of the Great Recession in late 2007 resulted in a rapid rise in economic uncertainty and loss of consumer confidence among Australian families. In the end, however, Australia is unique in avoiding the recession occurring elsewhere, with GDP growth remaining strong and unemployment rates rising only two percentage points. The widely anticipated and severe economic downturn in large part did not materialize. Yet, it is likely that the expectation of a crisis alone is enough to affect the well-being of Australians.

This paper analyzes the effects of ‘shocks’ to community-level unemployment expectations, induced by the onset of the Great Recession, on children’s mental well-being. We draw on and link data from multiple sources, including a nationally representative cohort study of children (LSAC), a consumer sentiment survey (CASiE) and data on local economic conditions. These data allow us to isolate the mental health effects of the stress generated by anticipation of the Great Recession from any mental health effects associated with deteriorating macroeconomic conditions. Specifically, we ask whether there is an adverse effect on child mental health associated with local unemployment expectations, whether this differs between boys and girls, and whether there is also an increase in levels of mothers’ distress during this time.

We find, for boys, there is no detectable effect of community-level unemployment expectations shocks on mental health. For girls, there are modest effects on total Strengths and Difficulties Questionnaire and the externalizing sub-scale, when using parent-rated but not teacher-rated outcomes. We additionally find no discernable change in mother’s psychological distress as a result of expectations shocks. These results are stable after controlling for actual labor market conditions.

Overall, we have a story of very little association between unemployment expectations shocks and mental well-being. This may have been, in part, due to the timely and seemingly effective response of the Australian Government in protecting the economy with stimulus packages.


October 10, 2018