Does Unemployment Worsen Babies’ Health? A Tale of Siblings, Maternal Behaviour and Selection

38 Pages Posted: 19 Mar 2020

See all articles by Elisabetta De Cao

Elisabetta De Cao

London School of Economics & Political Science (LSE) - London School of Economics; IZA

Barry McCormick

IZA Institute of Labor Economics

Catia Nicodemo

University of Oxford - Centre for Health Service Economics and Organisation; University of Oxford - Department of Economics

Date Written: February 25, 2020

Abstract

In this paper we study the effect of unemployment on birth outcomes by exploiting geographical variation in the unemployment rate across local areas in England, and comparing siblings born to the same mother via sibling fixed effects. Using rich individual data from hospital administrative records between 2003 and 2012, babies’ health is found to be strongly pro-cyclical. We find heterogenous responses: unemployment has an effect on babies’ health which varies from strongly adverse for the poorest, to mildly favourable for the richest. By using medically measured indicators, we test three potential mechanisms which can explain both the overall and heterogenous findings: maternal stress, health behaviour, and prenatal care. We also provide suggestive evidence that different selection into fertility drives the opposite counter-cyclical results found in other studies which do not employ sibling fixed effects.

Keywords: Unemployment rate, birth outcomes, birth weight, fertility, England

JEL Classification: E24, I10, I12, J13

Suggested Citation

De Cao, Elisabetta and McCormick, Barry and Nicodemo, Catia, Does Unemployment Worsen Babies’ Health? A Tale of Siblings, Maternal Behaviour and Selection (February 25, 2020). Available at SSRN: https://ssrn.com/abstract=3543980 or http://dx.doi.org/10.2139/ssrn.3543980

Elisabetta De Cao (Contact Author)

London School of Economics & Political Science (LSE) - London School of Economics ( email )

IZA ( email )

Barry McCormick

IZA Institute of Labor Economics ( email )

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Catia Nicodemo

University of Oxford - Centre for Health Service Economics and Organisation ( email )

Oxford
United Kingdom

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

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