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Abstract

A growing body of evidence emphasizes that shocks in early childhood can have irreversible effects on long-term child welfare and poverty. However, evidence on effects of shocks in early childhood on child cognition, particularly when measured after early childhood window during preschool and beyond, is scarce. Using child-level panel data from rural areas of Ethiopia, this paper analyzes effects of both economic and non-economic shocks on child cognition skills measured after early childhood age window. We find that exposure to these shocks significantly decreased child cognitive skills. On the other hand, safety net program put in place in 2005 to protect households from the economic effects of such shocks mitigated the reduction in cognitive skills. Results suggest that social safety nets, if well designed and implemented, can help check the long-lasting detrimental effects of shocks experienced during early childhood. This is crucial for child welfare and future human capital development.

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