The Social Impact of the Financial Crises in the Recent Past and Evidence Thereof

Abstract

Financial crises have significant short-term and long-term social costs. As a result, economic and social indicators have dwindled significantly since 2007. The soar in the unemployment rate has been most marked in so called advanced economies, reaching alarming levels in the tangential Europe with more than half of the young labour force unemployed in Greece and Spain. What is more, the crises, one global and another Euro zone financial crisis, have inexplicably hurt the poor. The progress in poverty alleviation has been not smooth across regions, and the pace has slowed since 2007 across the board. The crisis has also created challenges to the achievement of other development targets, including reduction of the occurrence of malnutrition and mortality rates, and civilizing gender equality in education and access to hygienic water and sanitation. This also suggests a significant loss or a reversal of the progress in development. In the above background, this paper presents evidence on the extent to which the global financial crisis and other crises since 2007 has been associated with deteriorating economic and social well-being indicators with a special focus on India. The results clearly indicate that poverty levels have been falling before the pre-crisis period but the post-crisis period witnessed a jump in the poverty rates across India.