Working Paper: CEPR ID: DP14444
Authors: Nicolas Berman; Lorenzo Rotunno; Roberta Ziparo
Abstract: How to allocate limited resources among children is a crucial household decision, especially in developing countries where it might have strong implications for children and family survival. We study how variations in parental income in the early life of their children affect subsequent child health and parental investments across siblings, using micro data from multiple waves of the Demographic and Health Survey (DHS) spanning 54 developing countries. Variations in the world prices of locally produced crops are used as measures of local income. We find that children born in periods of higher income durably enjoy better health and receive better human capital (health and education) investments than their siblings. Children whose older siblings were born during favourable income periods receive less investment and exhibit worse health in absolute terms. We interpret these within-household reallocations in light of economic and evolutionary theories that highlight the importance of efficiency considerations in competitive environments. Finally, we study the implications of these for aggregate child health inequality, which is found to be higher in regions exposed to more volatile crop prices.
Keywords: Health; Income; Parental Investments; Intrahousehold Allocations
JEL Codes: O12; I14; I15; D13; J13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher parental income during a child's early life (in utero and first year) (J13) | Better health outcomes (I14) |
| Higher parental income during a child's early life (in utero and first year) (J13) | Higher investments in health and education for that child (I15) |
| Higher parental income during a child's early life (in utero and first year) (J13) | Taller children (I24) |
| Children born after a sibling who experienced higher income (J13) | Reduced investments and worse health outcomes (I14) |
| Higher local producer price faced by older siblings at birth (J19) | Decreased health and investments for younger siblings (J13) |
| Regions with more volatile crop prices (Q11) | Higher child health inequality (I14) |
| Economic shocks (F69) | Disproportionate effects on children's health within families (I14) |