IDEAS home Printed from https://ideas.repec.org/p/iek/wpaper/1608.html
   My bibliography  Save this paper

The Effect of Income on Health: Using the Coal Boom as a Natural Experiment

Author

Listed:
  • Sunghoon Lim

    () (Department of Economics, The Pennsylvania State University State College, United States)

  • Beomsoo Kim

    () (Department of Economics, Korea University, Seoul, Republic of Korea)

Abstract

This study estimates the effect of positive income shocks on health conditions. We analyze the birth weight and mortalities of babies born in the US states of Kentucky, Ohio, and West Virginia during the early 1970s. Babies who were born in a coal-mining county benefited from the boom of the coal mining industry, whereas other babies did not. During the period, there was a sudden increase in the price of coal, resulting from an increase in the price of oil, which, in turn, resulted from an oil price embargo by the Organization of the Petroleum Exporting Countries. We use per capita personal income, which is the average income of people living in a county, as a measure for income. However, it is well known that there is an endogeneity issue when estimating the effect of income on health. To overcome the problem, we adopted the instrumental variable approach and use coal price as an instrument for income. We find that an exogenous $1,000 (in 1984 dollars) increase in income increases birth weight by 56 g. In addition, low birth weight would decrease by 0.9% point, which is 12% of the sample mean (7.6%). Our study avoids possible bias from compositional change by focusing on the period directly before and after the economic shock.

Suggested Citation

  • Sunghoon Lim & Beomsoo Kim, 2016. "The Effect of Income on Health: Using the Coal Boom as a Natural Experiment," Discussion Paper Series 1608, Institute of Economic Research, Korea University.
  • Handle: RePEc:iek:wpaper:1608
    as

    Download full text from publisher

    File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w1608.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Douglas Almond & Kenneth Y. Chay & David S. Lee, 2005. "The Costs of Low Birth Weight," The Quarterly Journal of Economics, Oxford University Press, vol. 120(3), pages 1031-1083.
    2. Frijters, Paul & Haisken-DeNew, John P. & Shields, Michael A., 2005. "The causal effect of income on health: Evidence from German reunification," Journal of Health Economics, Elsevier, vol. 24(5), pages 997-1017, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Health Outcome; Birth Weight; Low Birth Weight; Infant Mortality; Income Shock; Endogeneity; Two-stage Least Squares;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

    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:iek:wpaper:1608. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kim, Jisoo). General contact details of provider: http://edirc.repec.org/data/ierkukr.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.