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Inequality in the household: neonatal health effects on education outcomes and parents’ compensations among siblings.

Cabrera-Hernandez, Francisco and Orraca-Romano, Pedro (2021): Inequality in the household: neonatal health effects on education outcomes and parents’ compensations among siblings.

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Abstract

This study estimates neonatal health associations with future health and education outcomes and explores parents' reactions to low health endowments using a 9-year panel of Mexican siblings. We contribute to the literature by providing results on different aspects of the uterine environment in poorer settings and offering a more dynamic picture of how initial health influences education and parents' compensations among siblings, from childhood to adulthood. Our results are robust to different family fixed-effects models suggesting that unhealthy children at birth have worse adult health, a lower height, and fewer years of schooling at any age between 5 and 22. We offer evidence of reinforcing and compensating patterns among siblings: less-educated parents spend on average 15\% fewer economic resources on their less-healthy children's education, while wealthier parents invest 14\% more. Notably, the compensating pattern in richer settings starts early in life and remains consistent across all ages.

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