Executive summary

Economic recessions are often portrayed as short-term events. However, as a substantial body of economic literature shows, the consequences of high unemployment, falling incomes, and reduced economic activity can have lasting con-sequences. For example, job loss and falling incomes can force families to delay or forgo a college education for their children. Frozen credit markets and depressed consumer spending can stop the creation of otherwise vibrant small busi-nesses. Larger companies may delay or reduce spending on R&D. In each of these cases, an economic recession can lead to “scarring”—that is, long-lasting damage to individuals’ economic situations and the economy more broadly. Th is report examines some of the evidence demonstrating the long-run consequences of recessions. Findings include: Educational achievement: • Unemployment and in-come losses can reduce educational achievement by threatening early childhood nutrition; reducing families ’ abilities to provide a supportive learning environment (including adequate health care, summer activities, and stable housing); and by forcing a delay or abandonment of college plans