Effect of Austerity Measures on Infant Mortality: Evidence from Greece

Abstract

This study examines the effect of fiscal austerity measures on infant mortality in Greece. Austerity measures were initiated by the tripartite committee and implemented between 2010 and 2017 to counteract deep fiscal deficit and large public debt. By comparing Greece with a plausible donor pool of OECD and Mediterranean member states in the period 1991-2020, we estimate a series of missing counterfactual scenarios to evaluate the infant mortality effects of large-scale reduction in spending on health care. A series of hybrid synthetic control and difference-in-differences estimates indicate a unique and pervasive increase in infant mortality after the implementation of austerity measures. Compared to a plausible OECD and Mediterranean counterfactual scenario, pro-cyclical austerity measures are associated with derailed and permanently increased infant mortality up to the present day. Our estimates suggest that compared to a plausible counterfactual scenario, the cumulative infant mortality cost of austerity policies exceeds 10,000 infant deaths or slightly less than 850 deaths for each year of the austerity policies. Notably, mortality increases are concentrated among boys. The estimated impacts survive a battery of rigorous robustness and placebo tests.