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Does unemployment worsen babies' health? A tale of siblings, maternal behaviour and selection

De Cao, Elisabetta, McCormick, Barry and Nicodemo, Catia (2019) Does unemployment worsen babies' health? A tale of siblings, maternal behaviour and selection. IZA Discussion Paper Series (12568). Institute of Labor Economics, Bonn, Germany.

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Abstract

We study the effect of unemployment on birth outcomes by exploiting geographical variation in the unemployment rate across local areas in England, and comparing siblings born to the same mother via family fixed effects. Using rich individual data from hospital administrative records between 2003 and 2012, babies’ health is found to be strongly procyclical. A one-percentage point increase in the unemployment rate leads to an increase in low birth weight and preterm babies of respectively 1.3 and 1.4%, and a 0.1% decrease in foetal growth. We find heterogenous responses: unemployment has an effect on babies’ health which varies from strongly adverse in the most deprived areas, to mildly favourable in the most prosperous areas. We provide evidence of three channels that can explain the overall negative effect of unemployment on new-born health: maternal stress; unhealthy behaviours - namely excessive alcohol consumption and smoking; and delays in the takeup of prenatal services. While the heterogenous effects of unemployment by area of deprivation seem to be explained by maternal behaviour. Most importantly, we also show for the first time that selection into fertility is the main driver for the previously observed, opposite counter-cyclical results, e.g., Dehejia and Lleras-Muney (2004). Our results are robust to internal migration, different geographical aggregation of the unemployment rate, the use of gender-specific unemployment rates, and potential endogeneity of the unemployment rate which we control for by using a shift-share instrumental variable approach

Item Type: Monograph (Discussion Paper)
Official URL: https://www.iza.org/publications/dp
Additional Information: © 2019 Institute of Labor Economics
Divisions: Health Policy
Subjects: R Medicine > RJ Pediatrics > RJ101 Child Health. Child health services
H Social Sciences > HQ The family. Marriage. Woman
H Social Sciences > HN Social history and conditions. Social problems. Social reform
H Social Sciences > HD Industries. Land use. Labor
JEL classification: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
I - Health, Education, and Welfare > I1 - Health > I10 - General
I - Health, Education, and Welfare > I1 - Health > I12 - Health Production: Nutrition, Mortality, Morbidity, Suicide, Substance Abuse and Addiction, Disability, and Economic Behavior
Date Deposited: 29 Oct 2019 11:51
Last Modified: 26 Jan 2020 00:30
URI: http://eprints.lse.ac.uk/id/eprint/102270

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