"Parental Job Loss and Infant Health"

A new paper from a new colleague:

Parental Job Loss and Infant Health, by Jason Lindo: Abstract While a number of papers have analyzed the effects of job loss on various measures of health, this paper is the first to explore the extent to which the health effects extend to the children of displaced workers. More generally, this research sheds light on the causal link between socioeconomic status and infant health, as job displacements can be thought of as providing a plausibly exogenous shock to income. Specifically, I use detailed work and fertility histories from the Panel Study of Income Dynamics to estimate the impact of parents' job displacements on children's birth weights. These data allow for an identification strategy that essentially compares the outcomes of children born after a displacement to the outcomes of their siblings born before using mother fixed effects. I find that husbands' job losses have significant negative effects on infant health. They reduce birth weights by approximately four percent with the impact concentrated on the lower half of the birth weight distribution.

The paper ends with:

...I have examined the impacts of husbands' job displacements on children's birth weights. My findings represent a nice parallel with Sullivan and von Wachter (2009). Whereas there is evidence that mortality improves during recessions (Ruhm 2000), Sullivan and von Wachter (2009) show that individuals' job losses increase their mortality. Similarly, while Dehejia and Lleras-Muney (2004) present convincing evidence that birth weights improve during recessions, I find that husbands' job displacements have a negative effect on birth weights.

Although these results chip away at the \why do birth weights improve during recessions?" question, much work remains to be done on this topic. My results indicate that some aspects of the macroeconomic conditions besides husbands' job losses must play a major role. In fact, these other aspects must play a role so great that they more than offset the negative consequences of husbands' job losses that I find. What might these things be? Dehejia and Lleras-Muney (2004) show that there is positive selection into motherhood during recessions. That is, that women who have children during recessions are the types who would always tend to have healthier children. Another possible explanation relates to work-induced stress. Specifically, infant health might improve during recessions because women are less likely to be working while pregnant. Similarly, women's increased work activity following husbands' displacements might play a role in explaining the accompanying decline in birth weights.

The results of this paper also shed light on the relationship between socioeconomic status and health. Like prior papers, one could think of the displacement as a plausibly exogenous shock to household income. In that sense, my results suggest that the positive cross-sectional relationship between income and infant health is indicative of the causal link. This in turn implies that policies that provide income support, in addition to increasing consumption, can be expected to have the additional benefit of improving health outcomes.

I'll just add, very briefly, that the results also have implications for the health care debate. Here's more from the paper, including a graph showing how income and birth weights are related:

1 Introduction This work contributes to the growing literature on the impacts of job displacements that, while initially focusing on lost earnings, has more recently documented important consequences for health.¹ For example, Eliason and Storrie (2009), Sullivan and von Wachter (2009), and Rege, Telle, and Votruba (forthcoming) have found harmful effects on mortality using data from Sweden, Pennsylvania, and Norway, respectively.² Researchers have also analyzed the mental health effects of displacement, finding mixed results.³ Although the health effects have been explored in many different settings, the literature has focused primarily on the effects for displaced workers themselves.⁴  This paper is the first to explore the extent to which the health effects extend to the children of displaced workers. Specifically, I estimate the impact of parents' job displacements on birth weights. To deal with the possibility that job displacements might not be exogenous to infant health, I use models with mother fixed effects so that the estimated effects are driven primarily by a comparison of children born after a displacement to their siblings born before.

Although not usually focusing on health, a number of papers have demonstrated that job displacements have important consequences for the entire family. For example, Stephens (2002) shows that women work more following a husbands' job loss to compensate for his lost earnings; Charles and Stephens (2004) show that getting red increases the probability of divorce; and Lindo (forthcoming) shows that husbands' displacements affect fertility. Perhaps more closely related to this study, Oreopoulos, Page, and Stevens (2008), Page, Stevens, and Lindo (2009), and Stevens and Schaller (2009) have demonstrated that there are important consequences for children who are in the household when a parent is displaced. This paper, however, is the first to consider the impacts on children born following a parent's job loss.

This paper is closely related to Dehejia and Lleras-Muney (2004) who show that birth weights improve during recessions. While they show that both selection into motherhood and improvements in health-related behaviors play a role, like other papers analyzing the health effects of local unemployment rates, the identification strategy cannot disentangle the effects of own job displacements from other aspects of recessions. Recent research suggests that this distinction is crucial. Specifically, Sullivan and von Wachter (2009) find that own job displacements increase mortality for U.S. workers which is in contrast with evidence that mortality improves during recessions (Ruhm 2000).

This paper can also be thought of as providing a window into the relationship between socioeconomic status and health. In general, measures of socioeconomic status are positively related with measures of health. Figure 1 demonstrates that birth weights, the measure of infant health I focus on in this paper, are no exception.⁵ Of course, it is difficult to ascertain to what extent differences in socioeconomic status cause differences in infant health outcomes because there may be characteristics that lead individuals to have both lower socioeconomic status and to have children with poorer health. As argued in Oreopoulos, Page, and Stevens (2008), Page, Stevens, and Lindo (2009), Sullivan and von Wachter (2009), and Lindo (forthcoming), we can learn about the causal effect of income on various outcomes by considering the effects of job displacements which provide a plausibly exogenous shock to household income after controlling for individual fixed effects. As such, this paper offers insight into the causal link between family income and infant health.⁶

Using data from the Panel Study of Income Dynamics which has detailed information on both employment histories and fertility histories, I find that a husband's displacement reduces the birth weight of subsequent children by approximately four percent, or five ounces. I find economically (if not statistically) significant effects on low birth weight and, more generally, I find that the impact is concentrated in the bottom half of the birth weight distribution.

I further find that the effects are evident for children born immediately following the job loss and those born many years after the job loss, for both male and female children, and for those born to mothers of varying levels of education. I also present suggestive evidence that the effect might be driven by impacts on nutrition and/or work-induced stress. While it is possible to conduct a similar analysis of women's job displacements, I show that such an analysis is troublesome because job displacements may proxy for women's labor force participation. ...