The Causal Effect of Public Policy and Income on Child Health and Human Capital

Project Information

MISSINGMIDDLE

Grant agreement ID: 770958

DOI

10.3030/770958

Project closed

EC signature date 13 February 2018

Start date 1 March 2018

End date 31 August 2024

Funded under

• EXCELLENT SCIENCE - European Research Council (ERC)

Total cost

€ 1 048 750,00

EU contribution

€ 1 048 750,00

Coordinated by

UNIVERSIDAD POMPEU FABRA
Spain

Periodic Reporting for period 4 - MISSINGMIDDLE (The Causal Effect of Public Policy and Income on Child Health and Human Capital)

Reporting period: 2022-09-01 to 2024-08-31

Summary of the context and overall objectives of the project

My aim was to fill this gap by taking advantage of several natural experiments in a country, Spain, for which high quality administrative data are available for the past 35 years. State of the art econometric techniques, combined with large sample sizes, allow me to evaluate credibly the causal effects of a number of different public policies and shocks on child development.
I considered 5 different “shocks” in early childhood, affecting: i) Household material resources (an unconditional mother’s allowance); ii) Parental time (subsidized paternity leave); iii) Medical treatments around birth (elective delivery); iv) The availability of family planning services (access to abortion); and v) Aggregate demand shocks to different sectors of the economy.
I evaluate their impact on health and cognitive development at ages 0-15 as measured in hospital and primary health care records, school grades, and standardized test scores, among others. I also study the potential channels linking treatments to child outcomes. Results help us understand how shocks in early life can have long-term effects on human capital.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

The project evaluates the effects of a range of different “early interventions” on child outcomes. I proposed to study 5 different “shocks”:

1) Legalizing abortion
After abortion was legalized in Spain (1985), birth rates fell among young women, as did the number of marriages involving very young women. These effects were more pronounced in provinces where abortion services were provided in the early years after legalization. We follow the affected cohorts of women over time and find that the short-term fall in births did not translate into lower completed fertility. Births and marriages were delayed, but eventually women caught up, and women who had early access to abortion were less likely to divorce, indicating higher-quality marriages. The evidence also suggests that women who were able to avoid an early birth thanks to legal abortion were more likely to complete high school. We show that limiting access to abortion may have important negative short- and long-term
consequences for women, without increasing completed fertility. This paper has been (conditionally) accepted for publication at the Economic Journal.

2) Paternity leave
We analyzed the effects of the introduction of paternity leave in Spain on parents’ and children’s outcomes. We found that families where the father was eligible for paternity leave after the birth of a child were less likely to have another child in the future, compared with families where the father was not eligible. This may be because mothers go back to work earlier in households where the father can take paternity leave, but also because affected fathers have lower desired fertility. We also find that affected fathers spend more time on childcare even several years after the birth of the child. The first paper was published in the Journal of Public Economics. The second one (more theoretical) received a request to revise and resubmit from the Journal of the European Economic Association.
We then analyze the effect of paternity leave on child development and children’s attitudes about gender roles. We produced two working papers, one of which received a reject and resubmit from the Journal of Political Economy.

3) Family subsidies on children
First we analyze the effect of child benefits on fertility, exploiting the introduction and later cancelation of a child benefit in Spain. This paper was published at the Journal of Human Resources.
We then analyze the effects of benefit receipt on child human capital. We compare children who were born just before and just after the introduction of a universal child benefit in Spain in 2007. We find no significant effect on health outcomes or grades in primary school. We conclude that receiving the benefit after the birth of the child had no short or medium-term effects on health or cognitive development. This paper was accepted in the Journal of Labor Economics.
We then study effects on health for the younger siblings of the children born around the benefit introduction date in 2007. The question is now whether benefit receipt (in 2007) had any effect on the health at birth of the next child. We find that low-income women who received the benefit after having a child in 2007 were less likely to have a low-birthweight baby in their following pregnancy. This paper was published in the Journal of Health Economics.

4) Aggregate demand shocks
We produced a paper analyzing the effect of demand shocks to the tourism industry on local employment and wages. This paper was accepted for publication at the Journal of Human Resources.

5) Early elective deliveries
We exploit the cancelation of a child benefit in Spain to explore the effects of early elective deliveries on child health (at ages 0 to 10). We conclude that the short-term negative effects on respiratory health did not translate into long-term negative health effects. We are waiting to receive data on school outcomes in order to conduct the analysis of the effects on cognitive development (test scores). There was a substantial delay in data access due to the interruption of the collaboration between the regional statistical institute and the Barcelona School of Economics. We expect to be able to produce a working paper shortly.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

Considering the results described above, progress beyond the start of the art is:
1) The effects of legalizing abortion: Our contribution derives from the fact that we are able to provide credible estimates of the causal effect of a major national reform in the legal regulation of abortion on long-term outcomes for women. Previous studies for other countries had focused on short-term fertility effects. We are able to combine sound identification with high-quality data to shed light on a policy-relevant question.
2) The effects of paternity leave: The existing literature on the effects of paternity leave is still limited, given that these policies are relatively recent. We are the first to show that more generous paternity leave can have negative effects on fertility. Regarding effects on children, there is only one previous study documenting effects on school outcomes in Norway. Providing additional evidence from other countries is a relevant contribution to this recent literature.
3) The effects of family subsidies on children: To our knowledge, we are the first to provide strong causal evidence comparing the effects on child health of a benefit paid after the birth of a child, versus before the mother is pregnant.
4) Demand shocks to the tourism industry: We are one of the first to estimate the causal impact of international tourism flows on local labor markets. We propose a novel identification strategy based on shocks in competing destinations, and find that positive shocks to tourist inflows may have negative effects on local employment, due to employment reductions in other sectors.
5) Early elective deliveries: We provide estimates of the effects of low birthweight on short and medium-term health and cognitive development outcomes, by exploiting a specific manipulation that reduces birthweight due to an increase in early elective deliveries in connection to the cancelation of a child benefit in Spain. We contribute to the literature on the effects of birthweight on long-term outcomes.

The team