We study the mediating role played by the ethnic group on the relationship between economic downturns and birth outcomes. Using patient level data, we focus on the immigrant population in Italy during the 2007/08 Great Recession and exploit price variations of commercial estates (i.e. stores) to capture the dynamic spread of the recession through a difference in differences strategy. The general negative impact of the crisis on low-weight and premature babies is reinforced when the ethnic group to which the mother belongs is mainly employed in sectors most affected by the crisis, when women in the ethnic group of the mother are more overqualified for the work actually done, and when the ethnic concentration is high (i.e., higher risk of segregation) at the municipality level. On the contrary, higher integration of the ethnic group seems to buffer the effects of the recession (e.g., closer language proximity).
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