Working Paper 276 - A Tax on Children? Food Price Inflation and Health

Using a high-frequency local market price data from Ethiopia, we estimate the effects of exposure to food price inflation during “early life”—inception to the first 24 months after birth—on children’s health. Our analysis focuses on three major staple cereals. The results show that exposure to food price inflation while in utero and during infancy has detrimental and long-term impacts on children’s heights and weights. For instance, exposure to 10 percent inflation in teff prices in the 5–6th month of infancy, during which transition to complementary feeding starts, results in a loss of up to 0.08 centimeters of height and 5 grams of weight. Due to the complicated biological mechanisms and other factors through which malnutrition affects growth during “early life,” the effects vary considerably, depending on the specific month of exposure. Furthermore, we detect some heterogeneity along observed factors.