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The causal effect of family income on child health in the UK

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  • Kuehnle, Daniel

Abstract

Recent studies examining the effect of family income on child health have been unable to account for the endogeneity of income. Using data from a British cohort study, we address this gap by exploiting exogenous variation in local labour market characteristics to instrument for family income. We estimate the causal effect of family income on different measures of child health and explore the role of potential transmission mechanisms. We find that income has a very small but significant causal effect on subjective child health and no significant effect on chronic health conditions, apart from respiratory illnesses. Using the panel structure, we show that the timing of income does not matter for young children. Moreover, our results provide further evidence that parental health does not drive a spurious relationship between family income and child health. Our study implies that financial transfers are unlikely to deliver substantial improvements in child health.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jhecon:v:36:y:2014:i:c:p:137-150
    DOI: 10.1016/j.jhealeco.2014.03.011
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    More about this item

    Keywords

    Child health; Income gradient; Instrumental variables; Transmission channels; United Kingdom;
    All these keywords.

    JEL classification:

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

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