Early Health Shocks, Intrahousehold Resource Allocation, and Child Outcomes

44 Pages Posted: 30 Dec 2014

See all articles by Junjian Yi

Junjian Yi

University of Chicago

James J. Heckman

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Junsen Zhang

The Chinese University of Hong Kong (CUHK) - Department of Economics; IZA Institute of Labor Economics

Gabriella Conti

University of Chicago

Abstract

An open question in the literature is whether families compensate or reinforce the impact of child health shocks. Discussions usually focus on one dimension of child investment. This paper examines multiple dimensions using household survey data on Chinese child twins whose average age is 11. We find that, compared with a twin sibling who did not suffer from negative early health shocks at ages 0-3, the other twin sibling who did suffer negative health shocks received RMB 305 more in terms of health investments, but received RMB 182 less in terms of educational investments in the 12 months prior to the survey. In terms of financial transfers over all dimensions of investment, the family acts as a net equalizer in response to early health shocks for children.We estimate a human capital production function and establish that, for this sample, early health shocks negatively affect child human capital, including health, education, and socioemotional skills. Compensating investments in health as measured by BMI reduce the adverse effects of health shocks by 50%, but exacerbate the adverse impact of shocks on educational attainment by 30%.

Keywords: early health shocks, intrahousehold resource allocation, human capital formation

JEL Classification: C23, D13, I12, J13

Suggested Citation

Yi, Junjian and Heckman, James J. and Zhang, Junsen and Conti, Gabriella, Early Health Shocks, Intrahousehold Resource Allocation, and Child Outcomes. Available at SSRN: https://ssrn.com/abstract=2543905 or http://dx.doi.org/10.2139/ssrn.2543905

Junjian Yi (Contact Author)

University of Chicago ( email )

James J. Heckman

University of Chicago - Department of Economics ( email )

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Junsen Zhang

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IZA Institute of Labor Economics

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Gabriella Conti

University of Chicago ( email )

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