The Casual Effect of Family Income on Child Health: A Re-examination Using an Instrumental Variables Approach

Daniel Kuehnle ()

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: 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. 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.

Keywords: Child health; income gradient; instrumental variables; transmission channels; UK (search for similar items in EconPapers)
JEL-codes: I1 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2013-04
New Economics Papers: this item is included in nep-dem and nep-hea
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: The causal effect of family income on child health: A re-examination using an instrumental variables approach (2013)
Working Paper: The causal effect of family income on child health: A re-examination using an instrumental variables approach (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2013n13

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