Is the impact of health shocks cushioned by socio-economic status

This paper examines the long-term effects of low birthweight (LBW) on educational attainments, labor market outcomes, and health status using a data from the National Child Development Study. The study has followed the cohort of children born in Great Britain during one week in 1958 through age 33. We pay particular attention to possible interactions between LBW and socioeconomic status (SES), asking to what extent the deleterious effects of LBW are mitigated by higher SES. We find that LBW has significant long-term effects on self-reported health status, educational attainments, and labor market outcomes. However, there is little evidence of variation in the effects of LBW by SES. An important exception is that high SES women of LBW are less likely to report that they are in poor or fair health than other LBW women. Relative economic status shows a strong tendency to persist from one generation to the next. However, the mechanisms underlying the inter-generational transmission of status are poorly understood. Three facts suggest that health shocks offer a possible explanation for some of the persistence. First, poor health among teenagers and adults has been shown to have a negative impact on educational attainment, employment, and earnings (c.f. Currie and Madrian, 1999 for a review of this literature). Second, the poor are more likely to suffer from most forms of ill health than the rich (c.f. Wilkinson, 1996; Hertzman and Weins, 1996). Third, negative health shocks may have worse consequences for the poor than for the rich. For example, some observers have concluded that poor children suffer from double jeopardy in that they are both more likely to suffer negative shocks, and less likely to be able to recover from them (Bradley et al. 1994; Parker, Greer, and Zuckerman, 1988). This paper investigates the linkages between socio-economic status (SES) and a specific negative health shock: Low birth weight (LBW). There is much evidence that children of higher socio-economic status do better than other children on average, regardless of the outcome measure. This evidence may reflect either the effects of increased access to resources per se or the greater "efficiency" with which more educated (for example) mothers can use these inputs (c.f. Mayer, 1997; Rosensweig and Wolpin, 1994). There is also a great deal of evidence linking LBW to poor health, cognitive deficits, and behavioral problems among young children (c.f. Aylward et al., 1989; Brooks-Gunn, Liaw, and Klebanov, 1992; Kohen et al. 1997; McCormick, Gortmaker, and Sobel, 1990). Moreover, the problems tend to be most severe in the lightest infants. These observations suggest that the effects of LBW may be long lasting, but there has been little direct corroboration of this conjecture. The first goal of this study is to shed light on this issue.