Effect of Austerity Measures on Infant Mortality: Evidence From Greece

Abstract

Governments frequently adopt austerity policies when facing economic crises, yet their long-term consequences for population health remain incompletely understood. This paper examines the impact of large-scale fiscal austerity on infant mortality by exploiting the Troika-led economic adjustment program implemented in Greece beginning in 2010 as a quasi-experimental shock. Using the synthetic control method, we construct a counterfactual for Greece based on OECD and Union for the Mediterranean countries that did not experience austerity of comparable depth or duration. Relative to this counterfactual, Greece experienced a sharp and persistent increase in infant mortality following the onset of austerity. The divergence emerges immediately after 2010, remains statistically significant throughout the post-intervention period, and shows little evidence of full reversion prior to the COVID-19 pandemic. The estimated effect corresponds to an average 43 percent increase in the infant mortality rate. Mortality effects are larger for boys than for girls and are concentrated in the neonatal period. Accounting explicitly for the fertility decline, we estimate approximately 854 excess infant deaths cumulatively from 2010 to 2020. Extensive robustness checks support the findings. The results identify the total effect of austerity and highlight the importance of protecting early-life health during fiscal consolidation.