There is a well-documented, positive correlation between income and child health. Income is not a direct input into health production, thus the impact of parental income on child health must operate through either budgetary constraints or by shifting parental preference. Higher-income parents can afford to purchase more food, health care, and safer environments for their children. Parental tastes for child health inputs may also vary by income, as evidenced by income gradients in smoking, drinking, and prenatal care.
The effect of income can operate through many channels and economists have distinguished between the effects of transitory and permanent income because each type may have a distinct impact on health outcomes. A temporary income shock (e.g., drought, famine, variation in rainfall) can have an immediate, one-time effect that lasts into adulthood, particularly if the shock occurs during gestation or just after birth. Permanent family income has a direct correlation with child health, with the impact of permanent income on health growing as children age into adulthood.
Disparities in health across socioeconomic groups are evident at birth. Low income children have a higher incidence of low birth weight, poorer reported health status, and higher rates of chronic conditions in childhood; however, there is little evidence that the impact of being low birth weight varies by SES. Researchers have documented an income–health gradient that steepens over time, indicating that the disparities in health between high and low income children grow with age. The hypothesized mechanism behind the steepening of the gradient is the prevalence of shocks experienced by low income children. Although a health shock does not differentially impact low income children, the higher frequency of shocks experienced by low income children causes the gap in health status to widen with age.
Temporary income shocks near the time of birth produce detectable effects on health in only some studies. Negative income shocks, such as the phylloxera infestation that destroyed 40% of French vineyards between 1863 and 1890 and the Dust Bowl phenomenon in the American Midwest during the 1930s have been found to have minimal effects on health in adulthood. Individuals born in a phylloxera-affected region were shorter than their unaffected peers; however, other measures of population health were unchanged. Health in old age was also unaffected for individuals born in the Dust Bowl era. Positive income shocks as measured by rainfall improved the adult health, height, and completed education of females in Indonesia who were less than 1 year old during the increase in rainfall. No results were found for men or for rainfall shocks while the child was in utero, suggesting that improved outcomes for women during high rainfall years may be related to gender bias in nutritional intake during infancy.
Means-tested government transfer programs provide an exogenous, measurable income shock to eligible families and have been shown to improve child health. Mexico’s randomizedcontrolled experiment of PROGRESA provides cash transfers to households that comply with required behaviors including prenatal care, medical checkups, meeting nutritional guidelines, and attending educational meetings. Although it is not possible to separate the impact of the income transfer from the other features of the program, children born into the program have lower rates of illness than control families, are less likely to be anemic, and are slightly taller than control children. Furthermore, the impact of the program increased the longer the family received PROGRESA transfers. In the USA, it is unclear whether cash transfers to families participating in the Aid to Families with Dependent Children Program increased infant birth weight, whereas maternal participation in the Food Stamp Program (comparable to an income shock) increased the birth weight of infants at the low end of the birth weight distribution.
Macroeconomic conditions at the time of birth are related to both health at birth and long-run health and the relationship appears to have changed over time. Research using data on individuals born in the Netherlands between 1812 and 1912 finds that babies born in boom years have lower mortality rates later in life and live longer than babies born in recession years. More recent data suggest that the relationship between macroeconomic conditions and child health may have reversed. In the USA, a higher unemployment rate is associated with improvements in birth outcomes such as incidence of low birth weight and postneonatal mortality. During times of high unemployment, maternal health behaviors (smoking and drinking) improve and different types of women select into motherhood, which may explain the improved birth outcomes. Although aggregate birth outcomes improve during times of high unemployment, the impact of a job displacement for an individual family negatively impacts infant health. Comparing children in the same family, children born just after a parental job loss have lower birth weight than siblings born before the job loss.
Prenatal care can improve infant health by identifying conditions that can harm health such as low weight gain and by providing health and nutrition information to the mother. Athough it is well documented by researchers that policy levers can improve rates of prenatal care utilization, it is still unclear whether increased prenatal care translates to better infant health. Examinations of Medicaid expansions yield mixed results, but other policy changes that increased care have resulted in improvements in birth outcomes. Access to prenatal care appears to improve birth outcomes for those most at risk for poor birth outcomes such as low-income women and minority women who would have otherwise had minimal or low-quality prenatal care. A primary mechanism through which prenatal care improves birth outcomes is to reduce maternal smoking, which is the leading cause of growth retardation for fetuses. Health care at the time of birth is associated with a decline in the neonatal mortality rate, likely a result of access to life-saving technology.
Public health insurance programs such as Medicaid in the USA and National Health Insurance (NHI) in Canada provide prenatal and delivery care with the goal of improving both infant and maternal health. Introduction of universal health insurance in Canada during the 1960s and 1970s reduced infant mortality by 4% and reduced low birth weight classification on average, with single mothers experiencing a substantial reduction in the incidence of low birth weight. In the 1980s and 1990s, Medicaid significantly expanded its eligibility threshold to include a larger share of low-income, pregnant women. The program expansion initiated cost-saving measures, changing the insurance structure from fee-for-service to managed care for some enrollees. Evaluations of the changes consistently show impacts on prenatal care utilization but yield differing results on birth outcomes, with some researchers concluding that the changes improved birth outcomes and others finding no effect. Physician incentives to provide care are influenced by the type of payment structure Medicaid uses. Of particular interest is the relative incentives of Caesarian versus vaginal deliveries. Reduced incentives to provide care have been shown to increase the probability of low birth weight, prematurity, and neonatal mortality; however, studies that examine increased incentives to provide care find no effect on infant health.
The 1964 Civil Rights Act mandated desegregation of hospitals and greatly improved the quality of prenatal care available to blacks, particularly in the southern USA where hospitals for non whites were of poor quality. Desegregation reduced postneonatal mortality rates with gains driven by reductions in preventable deaths from pneumonia and gastroenteritis. The health of infants at birth also improved, as evidenced by reduced incidence of low birth weight and improved APGAR scores for the cohort born after desegregation. The narrowing of the black–white test score gap in the 1980s can be traced back to improved health of black cohorts born after desegregation, indicating that access to care that improved birth outcomes translated to increased human capital development later in life.
Another way to identify whether increased care translates to better outcomes is to examine infants on either side of the 1500 g very low birth weight classification. Infants below 1500 g receive more intense care than infants just above the threshold, resulting in lower mortality rates for infants classified as very low birth weight. In line with the findings that improved care after desegregation increased the test scores of black children, very low birth weight infants just below 1500 g who received additional care outperform their peers with birth weights exceeding 1500 g.