Epidemics and the Economy- An Economic Analysis of the 1918 Spanish Flu Pandemic in Scandinavia

• Applicant: Professor Dr. Martin Karlsson
• Subject Area: Economic Policy, Applied Economics ; Statistics and Econometrics ; Economic and Social History
• Term: from 2014 to 2017
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 250859189

For more than a century, life expectancy has been increasing in most Western societies, and less developed countries follow path. One rapidly evolving strand of the literature suggests that early life conditions matter to a much larger extent than previously acknowledged. Accordingly, the disease environment in utero and during childhood may have severe consequences throughout the life cycle and even for subsequent generations.However, one aspect which has been largely overlooked in the previous literature is the fundamental identification problem associated with an in utero exposure to disease. Beside children, who belong to the most vulnerable members of Society- pregnant women do as well, and it is well-known that health and socio-economic outcomes of mothers and their children stand in a complex relationship to each other. Thus, establishing that the in utero disease environment does matter is not sufficient to understand why and how it matters.In order to study this issue, we focus our attention on the so-called Spanish flu pandemic. This pandemic, which travelled the world between 1918 and 1920 forms an ideal setting for this analysis, for several reasons. First, sufficient time has elapsed for most of the long term effects of the pandemic to have worked out fully. Second, the Spanish flu pandemic claimed a death toll large enough to have had repercussions on the economy. Third, it has been claimed that the disease was blind in the sense that it did not have a clear socioeconomic gradient which would mean that the pandemic forms an excellent natural experiment. In particular, we aim at analyzing three distinct groups of research questions with high-quality data from Scandinavia 1) Analyzing spatial and socioeconomic patterns in the spread of the pandemicWas there a socioeconomic gradient in the mortality and morbidity related to the pandemic?Since the time period was characterized by large flows of working-age people moving between locations, did the pandemic lead to avoidance behaviour and disrupted internal migration flows?2) Short- and long-term effects of influenza exposureWhat are effects of in utero exposure on child mortality and adult outcomes (educational, incomes, employment) and did parental background factors and selective mortality bias estimates of previous studies?Did the in utero exposure run primarily through the mother's health shock (pregnancy scarring) as opposed to the health shock possibly experienced by the child (fetal exposure) or is there are third mechanism that influences the quality of parenting but have little to do with influenza during pregnancy (maternal scarring)?3) Macroeconomic implications of the pandemicWhat were the short- and medium-term effects of the pandemic on macroeconomic outcomes such as wages, capital returns and poverty rates?How does the economy adjust to a new long run equilibrium after a substantial one period shock to labor supply and human capital?

• DFG Programme: Research Grants