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The causal effect of family income on child health: A re-examination using an instrumental variables approach

  • Kuehnle, Daniel

Despite a recent growth in studies examining the association between family income and child health, very few studies investigate whether this is a causal relationship. This paper addresses this major methodological gap and examines the causal effect of family income on child health in the UK. Using rich observational data from a British cohort study, we exploit exogenous variation in local labour market characteristics to instrument for family income. We estimate the effect of family income on subjective child health and control for potential transmission channels through which income could affect child health. The results from our models provide novel evidence that income has a small but significant causal effect on subjective child health. Moreover, the analysis shows that parental health does not drive a spurious relationship between family income and child health as argued in recent contributions. We do not find significant effects of family income on chronic indicators of child health. The results are robust to different sets of instrumental variables, and to alternative measures of income.

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Paper provided by ZBW - German National Library of Economics in its series EconStor Preprints with number 70821.

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Date of creation: 2013
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Handle: RePEc:zbw:esprep:70821
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  1. Jacob, Brian A. & Ludwig, Jens & Miller, Douglas L., 2013. "The effects of housing and neighborhood conditions on child mortality," Journal of Health Economics, Elsevier, vol. 32(1), pages 195-206.
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  10. Bilger, M.; Carrieri.;, 2011. "Health in the cities: when the neighborhood matters more than income," Health, Econometrics and Data Group (HEDG) Working Papers 11/33, HEDG, c/o Department of Economics, University of York.
  11. Janet Currie & Mark Stabile, 2003. "Socioeconomic Status and Child Health: Why Is the Relationship Stronger for Older Children?," American Economic Review, American Economic Association, vol. 93(5), pages 1813-1823, December.
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  16. Xin Xu & Robert Kaestner, 2010. "The Business Cycle and Health Behaviors," NBER Working Papers 15737, National Bureau of Economic Research, Inc.
  17. Currie, Alison & Shields, Michael A. & Price, Stephen Wheatley, 2007. "The child health/family income gradient: Evidence from England," Journal of Health Economics, Elsevier, vol. 26(2), pages 213-232, March.
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