IDEAS home Printed from https://ideas.repec.org/p/iae/iaewps/wp2013n13.html
   My bibliography  Save this paper

The Casual Effect of Family Income on Child Health: A Re-examination Using an Instrumental Variables Approach

Author

Listed:
  • Daniel Kuehnle

    (Department of Economics, Friedrich-Alexander-University Erlangen-Nuremberg)

Abstract

Despite a recent growth in studies examining the association between family income and child health, very few studies investigate whether this is a causal relationship. This paper addresses this major methodological gap and examines the causal effect of family income on child health in the UK. Using rich observational data from a British cohort study, we exploit exogenous variation in local labour market characteristics to instrument for family income. We estimate the effect of family income on subjective child health and control for potential transmission channels through which income could affect child health. The results from our models provide novel evidence that income has a small but significant causal effect on subjective child health. Moreover, the analysis shows that parental health does not drive a spurious relationship between family income and child health as argued in recent contributions. We do not find significant effects of family income on chronic indicators of child health. The results are robust to different sets of instrumental variables, and to alternative measures of income. Despite a recent growth in studies examining the association between family income and child health, very few studies investigate whether this is a causal relationship. This paper addresses this major methodological gap and examines the causal effect of family income on child health in the UK. Using rich observational data from a British cohort study, we exploit exogenous variation in local labour market characteristics to instrument for family income. We estimate the effect of family income on subjective child health and control for potential transmission channels through which income could affect child health. The results from our models provide novel evidence that income has a small but significant causal effect on subjective child health. Moreover, the analysis shows that parental health does not drive a spurious relationship between family income and child health as argued in recent contributions. We do not find significant effects of family income on chronic indicators of child health. The results are robust to different sets of instrumental variables, and to alternative measures of income.

Suggested Citation

  • Daniel Kuehnle, 2013. "The Casual Effect of Family Income on Child Health: A Re-examination Using an Instrumental Variables Approach," Melbourne Institute Working Paper Series wp2013n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2013n13
    as

    Download full text from publisher

    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2013n13.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Victor R. Fuchs, 1982. "Economic Aspects of Health," NBER Books, National Bureau of Economic Research, Inc, number fuch82-1.
    2. repec:pri:cheawb:case_paxson_economic_status_paper is not listed on IDEAS
    3. Janet Currie & Mark Stabile, 2003. "Socioeconomic Status and Child Health: Why Is the Relationship Stronger for Older Children?," American Economic Review, American Economic Association, vol. 93(5), pages 1813-1823, December.
    4. Maurin, Eric, 2002. "The impact of parental income on early schooling transitions: A re-examination using data over three generations," Journal of Public Economics, Elsevier, vol. 85(3), pages 301-332, September.
    5. Bilger, Marcel & Carrieri, Vincenzo, 2013. "Health in the cities: When the neighborhood matters more than income," Journal of Health Economics, Elsevier, vol. 32(1), pages 1-11.
    6. Case, Anne & Lee, Diana & Paxson, Christina, 2008. "The income gradient in children's health: A comment on Currie, Shields and Wheatley Price," Journal of Health Economics, Elsevier, vol. 27(3), pages 801-807, May.
    7. Carol Propper & John Rigg & Simon Burgess, 2007. "Child health: evidence on the roles of family income and maternal mental health from a UK birth cohort," Health Economics, John Wiley & Sons, Ltd., vol. 16(11), pages 1245-1269.
    8. Dowd, Jennifer Beam, 2007. "Early childhood origins of the income/health gradient: The role of maternal health behaviors," Social Science & Medicine, Elsevier, vol. 65(6), pages 1202-1213, September.
    9. Mincer, Jacob, 1978. "Family Migration Decisions," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 749-773, October.
    10. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    11. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    12. Victor R. Fuchs, 1982. "Time Preference and Health: An Exploratory Study," NBER Chapters, in: Economic Aspects of Health, pages 93-120, National Bureau of Economic Research, Inc.
    13. Khanam, Rasheda & Nghiem, Hong Son & Connelly, Luke B., 2009. "Child health and the income gradient: Evidence from Australia," Journal of Health Economics, Elsevier, vol. 28(4), pages 805-817, July.
    14. Steffen Reinhold & Hendrik Jürges, 2012. "Parental income and child health in Germany," Health Economics, John Wiley & Sons, Ltd., vol. 21(5), pages 562-579, May.
    15. Paul Gregg & Elizabeth Washbrook & Carol Propper & Simon Burgess, 2005. "The Effects of a Mother's Return to Work Decision on Child Development in the UK," Economic Journal, Royal Economic Society, vol. 115(501), pages 48-80, February.
    16. Jacob, Brian A. & Ludwig, Jens & Miller, Douglas L., 2013. "The effects of housing and neighborhood conditions on child mortality," Journal of Health Economics, Elsevier, vol. 32(1), pages 195-206.
    17. Janet Currie, 2009. "Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 87-122, March.
    18. Larry Long, 1972. "The influence of mumber and ages of children on residential mobility," Demography, Springer;Population Association of America (PAA), vol. 9(3), pages 371-382, August.
    19. Douglas Almond & Janet Currie, 2011. "Killing Me Softly: The Fetal Origins Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 25(3), pages 153-172, Summer.
    20. Orla Doyle & Colm Harmon & Ian Walker, 2007. "The Impact of Parental Income and Education on Child Health. Further Evidence for England," Working Papers 200706, Geary Institute, University College Dublin.
    21. Rowland Atkinson & Keith Kintrea, 2001. "Disentangling Area Effects: Evidence from Deprived and Non-deprived Neighbourhoods," Urban Studies, Urban Studies Journal Limited, vol. 38(12), pages 2277-2298, November.
    22. James J. Heckman, 2007. "The Economics, Technology and Neuroscience of Human Capability Formation," NBER Working Papers 13195, National Bureau of Economic Research, Inc.
    23. repec:ucn:wpaper:10197/1111 is not listed on IDEAS
    24. Carol Propper & John Rigg & Simon Burgess, 2007. "Child health: evidence on the roles of family income and maternal mental health from a UK birth cohort," Health Economics, John Wiley & Sons, Ltd., vol. 16(11), pages 1245-1269, November.
    25. Paul Frijters & David W. Johnston & Manisha Shah & Michael A. Shields, 2009. "To Work or Not to Work? Child Development and Maternal Labor Supply," American Economic Journal: Applied Economics, American Economic Association, vol. 1(3), pages 97-110, July.
    26. repec:pri:cheawb:case_paxson_economic_status_paper.pdf is not listed on IDEAS
    27. Chen, Edith & Martin, Andrew D. & Matthews, Karen A., 2006. "Socioeconomic status and health: Do gradients differ within childhood and adolescence?," Social Science & Medicine, Elsevier, vol. 62(9), pages 2161-2170, May.
    28. Anne Case & Darren Lubotsky & Christina Paxson, 2002. "Economic Status and Health in Childhood: The Origins of the Gradient," American Economic Review, American Economic Association, vol. 92(5), pages 1308-1334, December.
    29. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    30. Xin Xu & Robert Kaestner, 2010. "The Business Cycle and Health Behaviors," NBER Working Papers 15737, National Bureau of Economic Research, Inc.
    31. Fuchs, Victor R. (ed.), 1982. "Economic Aspects of Health," National Bureau of Economic Research Books, University of Chicago Press, number 9780226267852, September.
    32. Currie, Alison & Shields, Michael A. & Price, Stephen Wheatley, 2007. "The child health/family income gradient: Evidence from England," Journal of Health Economics, Elsevier, vol. 26(2), pages 213-232, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Adnan Fakir & M Khan, 2015. "Determinants of malnutrition among urban slum children in Bangladesh," Health Economics Review, Springer, vol. 5(1), pages 1-11, December.
    2. Bénédicte Apouey & Pierre-Yves Geoffard, 2015. "Le gradient et la transmission intergénérationnelle de la santé pendant l'enfance," Économie et Statistique, Programme National Persée, vol. 475(1), pages 113-133.
    3. Adnan M. S. Fakir, 2016. "Revisiting the child health-wealth nexus," Health Economics Review, Springer, vol. 6(1), pages 1-13, December.
    4. repec:hal:pseose:halshs-01155572 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kuehnle, Daniel, 2014. "The causal effect of family income on child health in the UK," Journal of Health Economics, Elsevier, vol. 36(C), pages 137-150.
    2. Owen O'Donnell & Eddy Van Doorslaer & Tom Van Ourti, 2013. "Health and Inequality," Tinbergen Institute Discussion Papers 13-170/V, Tinbergen Institute.
    3. Steffen Reinhold & Hendrik Jürges, 2012. "Parental income and child health in Germany," Health Economics, John Wiley & Sons, Ltd., vol. 21(5), pages 562-579, May.
    4. Jason Murasko, 2015. "The Age Profile of the Income–Health Gradient: An Evaluation of Two Large Cohorts of Contemporary US Children," Journal of Family and Economic Issues, Springer, vol. 36(2), pages 289-298, June.
    5. Khanam, Rasheda & Nghiem, Hong Son & Connelly, Luke B., 2009. "Child health and the income gradient: Evidence from Australia," Journal of Health Economics, Elsevier, vol. 28(4), pages 805-817, July.
    6. Mara Violato & Stavros Petrou & Ron Gray & Maggie Redshaw, 2011. "Family income and child cognitive and behavioural development in the United Kingdom: does money matter?," Health Economics, John Wiley & Sons, Ltd., vol. 20(10), pages 1201-1225, October.
    7. Apouey, Bénédicte & Geoffard, Pierre-Yves, 2013. "Family income and child health in the UK," Journal of Health Economics, Elsevier, vol. 32(4), pages 715-727.
    8. Rasheda Khanam & Hong Son Nghiem & Luke Brian Connelly, 2014. "What Roles Do Contemporaneous And Cumulative Incomes Play In The Income–Child Health Gradient For Young Children? Evidence From An Australian Panel," Health Economics, John Wiley & Sons, Ltd., vol. 23(8), pages 879-893, August.
    9. Shu-Hsi Ho & Wen-Shai Hung, 2013. "A study of the Health of Children Born to Foreign- and Native-Born Mothers in Taiwan," Journal of Family and Economic Issues, Springer, vol. 34(3), pages 355-368, September.
    10. Nakamura, Sayaka, 2014. "Parental income and child health in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 32(C), pages 42-55.
    11. Kai Eberhard Kruk, 2013. "Parental Income And The Dynamics Of Health Inequality In Early Childhood—Evidence From The Uk," Health Economics, John Wiley & Sons, Ltd., vol. 22(10), pages 1199-1214, October.
    12. Almond, Douglas & Currie, Janet, 2011. "Human Capital Development before Age Five," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 15, pages 1315-1486, Elsevier.
    13. Anne Nolan & Richard Layte, 2014. "Socio-economic Inequalities in Child Health in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 45(1), pages 25-64.
    14. Swaminathan, Harini & Sharma, Anurag & Shah, Narendra G., 2019. "Does the relationship between income and child health differ across income groups? Evidence from India," Economic Modelling, Elsevier, vol. 79(C), pages 57-73.
    15. Goode, Alison & Mavromaras, Kostas & zhu, Rong, 2014. "Family income and child health in China," China Economic Review, Elsevier, vol. 29(C), pages 152-165.
    16. Rasheda Khanam & Son Nghiem & Maisha Rahman, 2020. "The income gradient and child mental health in Australia: does it vary by assessors?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(1), pages 19-36, February.
    17. de Gendre, Alexandra & Lynch, John & Meunier, Aurélie & Pilkington, Rhiannon & Schurer, Stefanie, 2021. "Child Health and Parental Responses to an Unconditional Cash Transfer at Birth," IZA Discussion Papers 14693, Institute of Labor Economics (IZA).
    18. Apouey, Bénédicte H. & Geoffard, Pierre-Yves, 2016. "Parents’ education and child body weight in France: The trajectory of the gradient in the early years," Economics & Human Biology, Elsevier, vol. 20(C), pages 70-89.
    19. Jason Fletcher & Barbara Wolfe, 2014. "Increasing Our Understanding Of The Health‐Income Gradient In Children," Health Economics, John Wiley & Sons, Ltd., vol. 23(4), pages 473-486, April.
    20. Costa-Font, Joan & Gil, Joan, 2013. "Intergenerational and socioeconomic gradients of child obesity," Social Science & Medicine, Elsevier, vol. 93(C), pages 29-37.

    More about this item

    Keywords

    Child health; income gradient; instrumental variables; transmission channels; UK;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iae:iaewps:wp2013n13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sheri Carnegie (email available below). General contact details of provider: https://edirc.repec.org/data/mimelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.