May 15, 2014
Janet Currie of Princeton University, Organizer

Prashant Bharadwaj, University of California, San Diego and NBER

Health Endowments and Unemployment during Macroeconomic Crises

Bharadwaj, Lundborg, and Rooth show that health endowments at birth can have important repercussions for labor market outcomes during large financial crises. Using data on adult males during Sweden's severe economic crisis in the early 1990s, the authors show that adults who were born with lower birth weight were much more likely to receive unemployment insurance and to do so for years after the crisis. The returns to birth weight in the labor market also increase after the crisis. These results hold while controlling for individual education and occupational sorting prior to the crisis, and for maternal inputs by using a twins fixed effect. The authors conclude that health at birth is a potentially important indicator of vulnerability during macroeconomic shocks.

Anna Aizer, Brown University and NBER; Adriana Lleras-Muney, University of California, Los Angeles and NBER; Joseph Ferrie, Northwestern University and NBER; and Shari Eli, University of Toronto

The Long Run Impact of Cash Transfer Programs to Poor Families

Aizer, Eli, Ferrie, and Lleras-Muney estimate the long-run impact of cash transfers to poor families on children's longevity, educational attainment, nutritional status, and income in adulthood. To do so, they collected individual-level administrative records of applicants to the Mothers' Pension program - the first government-sponsored welfare program in the United States, 1911–35 - and matched them to census, World War II enlistment, and death records. Male children of accepted applicants lived one year longer than those of rejected mothers. Male children of accepted mothers received one-third more years of schooling, were less likely to be underweight, and had higher income in adulthood than children of rejected mothers.

Achyuta Adhvaryu, University of Michigan; Jivita Bangladesh, Parul Christian, Alain Labrique, Abu Shamim, and Keith West, Jr., Johns Hopkins University; Snaebjorn Gunnsteinsson, University of Maryland; and Jonathan Sugimoto, Fred Hutchinson Cancer Research Center

Vitamin A and Resilience to Early Life Shocks

Recent studies have documented the immediate and lasting effects of trauma in early life, but little is understood about how to protect children from these negative impacts. Protective effects are difficult to identify empirically, because both preventative and corrective investments are endogenous choices. Adhvaryu, Bangladesh, Christian, Gunnsteinsson, Labrique, Shamim, Sugimoto, and West leverage a unique combination of events in which a tornado struck an area of northwest Bangladesh that was involved in a double-blind cluster randomized controlled trial (RCT) of maternal and newborn vitamin A supplementation, along with detailed birth and mortality records and anthropometric measurements at zero to six months, to test whether vitamin A supplementation mitigates the deleterious effects of experiencing a natural disaster in early life. Exposure to the tornado at zero to three months had a negative impact on infants' anthropometric outcomes, and increased the frequency of severe fevers. However, infants treated with vitamin A at birth through the RCT were largely protected from these effects. Maternal supplementation did not exhibit a similar protective capacity. The authors' results suggest that simple health interventions at birth can protect effectively against trauma in early life and that more research on the role of micronutrients in infants' resilience to shocks is likely to be valuable.

Paul Gertler, University of California, Berkeley and NBER; Sally Grantham-Mcgregor, Institute of Child Health; James Heckman, University of Chicago and NBER; Rodrigo Pinto and Arianna Zanolini, University of Chicago; Christel Vermeersch, The World Bank; and Susan Chang and Susan Walker, University of the West Indies

Labor Market Returns to a Early Childhood Stimulation Intervention in Jamaica

A substantial literature shows that U.S. early childhood interventions have significant long-term economic benefits. There is little evidence on this question for developing countries. Gertler, Heckman, Pinto, Zanolini, Vermeersch, Walker, Chang-Lopez, and Grantham-McGregor report substantial effects on the earnings of participants in a randomized intervention conducted in 1986–7 that gave psychosocial stimulation to growth-stunted Jamaican toddlers. The intervention consisted of weekly visits over a two-year period by community health workers who taught parenting skills and encouraged mothers and children to interact in ways that develop cognitive and socioemotional skills. The authors re-interviewed 105 out of 129 study participants 20 years later and found that the intervention increased earnings by 25 percent, enough for them to catch up to the earnings of a non-stunted comparison group identified at baseline (65 out of 84 participants).

Petra Persson, Stanford University, and Maya Rossin-Slater, University of California, Santa Barbara

Family Ruptures and Intergenerational Transmission of Grief

The high and rapidly increasing prevalence of mental illness underscores the importance of understanding their causal origins. Persson and Rossin-Slater analyze one factor at a critical stage of human development: exposure to maternal stress from family ruptures during the fetal period. They find that in utero exposure to the death of a maternal close relative has lasting consequences on mental health in adulthood, as captured by 11 and 9 percent increases in the consumption of prescription drugs treating anxiety and depression, respectively, and a 23 percent increase in the average daily dose of medication for Attention Deficit Hyperactivity Disorder (ADHD). Further, children exposed prenatally to the death of a relative up to four generations apart are 20 percent more likely to be born with low birth weight and 11 percent more likely to be hospitalized for conditions originating in the perinatal period in early childhood. The authors' results imply large welfare gains from preventing fetal exposure to severe stress; the decrease in consumption of prescription drugs treating depression alone can be valued at nearly $1 billion. More generally, the results point to in utero stress exposure as a potential cause of the rising incidence of several mental illnesses.

Lena Edlund, Columbia University and NBER, and Paola Valenti, Columbia University

Should I Stay or Should I Go?

Edlund and Valenti propose a model of single motherhood where a child is a public good to his parents and parental care is in the form of voluntary contributions. They argue that the two-parent family can be sustained in either an indigent or a high-resource environment, but is vulnerable if a single mother β€œcan just make it.” The proposed reason is that in a repeated prisoners' dilemma game, defection of the mother as a response to defection of the father can maintain cooperation. However, a tit-for-tat strategy is only credible if the mother cannot support a child and is therefore better off abandoning her, or child quality can be reduced without major harm to the child, allowing the mother to counter defection with defection. By contrast, mothers who can support a child, but barely, cannot reduce their effort without jeopardizing the child, a bind that can make them vulnerable to desertion. The authors present supporting evidence from the United States' natality data from 1969 to 2008 and time use surveys from 1965 to 2012.

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