coefficients on the interaction terms are never significant, suggesting that household responses to the crisis did not vary significantly.

Table 3 presents OLS regression results for the mean years of completed schooling. I report two sets of specifications: **In** the first, the measure of exposure is continuous (upper panel), in the second it enters as a set of dummy variables corresponding to individual years of exposure (lower panel). The results for the continuous exposure variable suggest that every year of exposure to the crisis is associated with a .04 to .05 increase in the number of years of schooling attained. That is, children wlho were of school-age for the entire 1988-92 period would have completed about one-quarter more school years than those who were entirely unexposed. Since completed schooling only changes by whole integers, one way of interpreting this coefficient is that one out of every four or five fully exposed children will have completed one more year of schooling than the comparable unexposed.

The dummy variable specifications in the lower panel of Table 3 provide weak evidence that school attainment does not increase _proportionately_ with crisis exposure: A "low" amount of crisis exposure-l to 2 years-appears to have no effect on school attainment, while "high" crisis exposure-3 to 5 years-increases schooling by about 0.2 years. One possible interpretation of this finding is that children or their parents take time to adjust their schooling and employment decisions to a crisis. Too much slhould not be made of these more nuanced results, however: F- tests on the additional coefficients fail to reject-the null that these dummy variable specifications do not represent a significant improvement in fit over the more parsimonious specifications in which crisis exposure enters the regression linearly.

Discussion: Macroeconomic crises can affect the total amount of schooling chosen, the timing of this schooling, and the extent to which schooling is combined with work. The 1988-92 crisis in Peru appears to have reduced access to credit; if anything, this should have led to a reduction in human capital investment during the crisis. The effect of the crisis on the marginal benefits from education is unclear in theory. For this second channel to be part of the explanation of my finding the crisis would have had to be perceived both as persistent and as disproportionately affecting the earnings and employment prospects of low-skilled workers. Comparisons based on the 1985/86, 1991, and 1997 LSMS suggest that incomes fell substantially for households with heads with different amounts of schooling."<sup>4</sup> Moreover, using data from

> _14_ Glewwe and Hall (1998) report results based on a panel of households _in Lima only_ included in the 1985/86 LSMS and in a follow-up survey conducted in 1990 which suggest that households in which the head had more schooling suffered simaller income losses. I find no clear pattern: A simple tabulation of income by the education of the household head shows that mean income fell by more in households with heads with some secondary education (-41 %) than in households with primary education or less (-27%), or

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