Ana Maria Menezes
In episodes of hyperinflation, poor families concentrate expenditures in the pay period and reduce money demand for precautionary reasons to escape the inflation tax. We use rich longitudinal cohort data from a city in Brazil to show that children born in the pay period during hyperinflation attain up to 20% of a standard deviation more years of schooling than children born in the other periods of the month. We also show that mothers who give birth in the pay period are less likely to have mental health problems and are more likely to be working in the future, implying that financial hardship around the delivery date can have lifelong effects on mothers and their children. We also use data for all three million Brazilian students born in 1993 to estimate a positive impact of birth in the pay period on education and find that the effect disappears for the cohort born in 1995, after the end of hyperinflation.