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The Long Run Economic Effects of Medical Innovation and the Role of Opportunities

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Listed:
  • Sonia R. Bhalotra
  • Damian Clarke
  • Atheendar Venkataramani

Abstract

We leverage the introduction of the first antibiotic therapies in 1937 to examine the long-run effects of early-childhood pneumonia on adult educational attainment, employment, income, and work-related disability. Using census data, we document large average improvements across all outcomes, alongside substantial heterogeneity by gender and race. Among women, health gains led to changes in marriage and fertility that partially offset their labor market improvements. Among Black Americans, we uncover a pronounced gradient linked to systemic racial discrimination in the pre–Civil Rights era: individuals born in more discriminatory Jim Crow states realized much smaller gains than those born in less discriminatory states, despite larger reductions in pneumonia exposure. There is no similar gradient among white Americans. Together, these findings highlight the central role of institutional environments in shaping whether investments in early-life health translate into long-run socioeconomic gains.

Suggested Citation

  • Sonia R. Bhalotra & Damian Clarke & Atheendar Venkataramani, 2025. "The Long Run Economic Effects of Medical Innovation and the Role of Opportunities," NBER Working Papers 34606, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34606
    Note: CH DAE EH
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    JEL classification:

    • I0 - Health, Education, and Welfare - - General
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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