Fiscal crises and personal troubles: the great recession in Ireland and family processes

Richard Layte, Cathal McCrory

Social disadvantage is often associated with worse child psychological adjustment which itself is implicated in educational failure and poor adult social position. The family stress model holds that the association between social disadvantage and psychological adjustment stems from the impact of economic pressure on parental mental health mediated through the parent/child relationship. We take advantage of a natural experiment offered by the 'great recession' in Ireland between 2008 and 2012. Structural equation models using causal modelling and Longitudinal data from the Growing Up in Ireland cohort study are used to test whether the experience of recession in families impacts on children's psychological adjustment and whether this occurs directly or is mediated by the processes identified in the family stress model. More than 70% of families experienced a reduction in income between 2008 and 2011 and 26% reported cutting back on basics such as clothing and food. Family experience of recession was significantly associated with negative change in all of the components of the family stress model, particularly parental mental health. However, less than half of the effect of recession was mediated by the processes of the family stress model. Tests showed that a model with a direct effect of recession on child psychological adjustment provided a better fit to the data. Recession and economic pressure had a significant effect on child psychological adjustment, but only a minority of this effect was indirect via the mental health of parents and parent/child relationship. The family stress model only offers a partial account of the mechanisms through which economic hardship impacts on families and children.