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

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  • De Cao, Elisabetta

    (University of Bologna)

  • McCormick, Barry

    (University of Oxford)

  • Nicodemo, Catia

    (University of Oxford)

Abstract

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 family fixed effects. Using rich individual data from hospital administrative records between 2003 and 2012, babies' health is found to be strongly pro-cyclical. A one-percentage point increase in the unemployment rate leads to an increase in low birth weight and preterm babies of respectively 1.3 and 1.4%, and a 0.1% decrease in foetal growth. We find heterogenous responses: unemployment has an effect on babies' health which varies from strongly adverse in the most deprived areas, to mildly favourable in the most prosperous areas. We provide evidence of three channels that can explain the overall negative effect of unemployment on new-born health: maternal stress; unhealthy behaviours - namely excessive alcohol consumption and smoking; and delays in the take-up of prenatal services. While the heterogenous effects of unemployment by area of deprivation seem to be explained by maternal behaviour. Most importantly, we also show for the first time that selection into fertility is the main driver for the previously observed, opposite counter-cyclical results, e.g., Dehejia and Lleras-Muney (2004). Our results are robust to internal migration, different geographical aggregation of the unemployment rate, the use of gender-specific unemployment rates, and potential endogeneity of the unemployment rate which we control for by using a shift-share instrumental variable approach.

Suggested Citation

  • De Cao, Elisabetta & McCormick, Barry & Nicodemo, Catia, 2019. "Does Unemployment Worsen Babies' Health? A Tale of Siblings, Maternal Behaviour and Selection," IZA Discussion Papers 12568, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12568
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    Cited by:

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    5. Jimena Pacheco & Natascha Wagner, 2023. "Long‐term impacts of an early childhood shock on human capital: Evidence from the 1999 economic crisis in Ecuador," Health Economics, John Wiley & Sons, Ltd., vol. 32(11), pages 2460-2476, November.
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    7. Reader, Mary, 2023. "The infant health effects of starting universal child benefits in pregnancy: Evidence from England and Wales," Journal of Health Economics, Elsevier, vol. 89(C).
    8. Clark, Andrew E. & D’Ambrosio, Conchita & Rohde, Nicholas, 2021. "Prenatal economic shocks and birth outcomes in UK cohort data," Economics & Human Biology, Elsevier, vol. 41(C).

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    More about this item

    Keywords

    fertility; birth weight; birth outcomes; unemployment rate; England;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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