The Social Costs of Financial Crises
Mathijs van Dijk – Using data on 187 banking crises in 126 countries over the period 1970-2009, I examine the impact of a crisis not only on GDP growth, unemployment, and the financial sector, but also on health, education, poverty, and gender issues. A wider-angle lens exposes broad-ranging implications for society. For example, in the six years following a crisis, average life expectancy declines by nine months, primary school enrolment drops by 3.5%, and fertility falls by 5.5% (but adolescent fertility rises by 4.5%). I also find a considerable short-run worsening of poverty and income equality, and a lasting 50% increase in outbound refugees and inbound foreign aid. Although output and employment suffer at least as much for developed countries, the social costs of financial crises are much greater for less-developed countries.
Reading Development 