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«Abstract This study analyzes how parental investment responds to a low birth weight (LBW) outcome and finds important differences in investment ...»

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Now shifting the focus to the effect of the number of LBW siblings in the home on parental investment, there is also evidence of reinforcing investment behavior among low-educated mothers but less reinforcing or compensatory investment behavior among higher-educated mothers. The presence of each LBW sibling in the home of high school dropouts is estimated to increase cognitive stimulation in a child by 33.5% of a SD. However, the positive impact of LBW siblings on cognitive stimulation in a child for mothers with a high school degree and some college are much smaller in magnitude—2.3% of a SD and 0.4% of a SD, respectively—and the impact is negative (albeit less precisely estimated) suggesting compensatory behavior for mothers with 4 years of college or more. And for emotional support, while each LBW sibling in the home of high school dropouts raises the emotional support given to a child by a statistically insignificant 22% of a SD, it lowers the emotional support given to a child by 47-90% of a SD in the homes of families above the median of the income distribution.

The most robust finding is that of differential investment responses to a LBW outcome by maternal education. I now explore the implications of these results for differences in child outcomes of LBW children born to low-educated versus high-educated mothers. Blau (1999) reports that a one SD increase in HOME scores is associated with a 7-14% of a SD increase in child assessments measuring cognitive, social, and emotional development. Using the estimates from Table 4, my results suggest that the response of investment to a LBW outcome by high school dropouts may lead to decreases in the development of their LBW children by up to 2% of a SD. In contrast, the corresponding response to a LBW outcome by mothers with at least a 4 year college degree may lead to increases in the development of their LBW children of up to 2% of a SD. Furthermore, if a one SD increase in child test scores is associated with an increase in wages of 4% to 10% (Carneiro et al. 2007), then the investment patterns among high school dropouts (4-year college graduates) may lead to decreases (increases) in the earnings of LBW children of up to 0.2%. These rough calculations suggest that investment responses to a LBW outcome may nontrivially accentuate within-family earnings inequality associated with a LBW outcome at the low end of the maternal education distribution while they may nontrivially mitigate it at the high end.

Another way to examine the implications of heterogeneous investment responses to a LBW outcome by education is to analyze the impact of child endowments on the risk of exposure to very low levels of parental investments. Totsika and Sylva (2004) indicate that, for HOME scores, the “lowest fourth of the score range indicate an environment that may pose a risk to some aspect of the child’s development.” In Table 5, I show results from a specification similar to the one used for the results shown in Table 4, except that the dependent variables are dummy variables equal to one if a child’s age-standardized HOME score is at the 25th percentile or worse and zero otherwise. The results indicate that the risk of obtaining an at-risk HOME score is 6 percentage points higher for LBW children born to high school dropouts, which is a 13% increase relative to the sample at-risk HOME score mean (0.46) for these mothers. In contrast, the corresponding risk for LBW children born to 4-year college graduates or more is almost 8 percentage points lower—a decrease of 36% relative to the sample mean (0.21) for these mothers. These results suggest that differential investment behavior by education may put LBW children born to low-educated mothers at higher risk of developmental delays or deficits.

5. Discussion and Conclusion

I find that on average parental investment reinforces a LBW outcome. This finding is consistent with a recent review of the literature (Almond and Mazumder 2013), which concluded that studies of parental investment responses to child endowment differences seem to “tilt against compensatory investments.” However, the direction and magnitude of parental investment responses to a LBW outcome vary by maternal education. Low-educated mothers reinforce a LBW outcome by investing less in the human capital of their LBW children, whereas highereducated mothers compensate for a LBW outcome by allocating more resources to their LBW children. In addition, investment in a child increases with the number of LBW siblings present in the homes of low-educated mothers but increases to a much smaller extent and in some cases decreases in the homes of higher-educated mothers. This is also consistent with the notion that investment behavior is reinforcing at the low end of the education distribution and less reinforcing or compensatory at the high end.

The results in this study complement those of studies that have examined whether the effect of poor child endowments are mitigated by a family’s socioeconomic status (Currie and Moretti 2007; Lin et al. 2007; Almond et al. 2009; Zvara and Schoppe-Sullivan 2010; Cheadle and Goosby (2010); Halla and Zweimuller 2014; Beach and Saavedra 2015). These studies find that poorly endowed children achieve worse outcomes and that the negative impacts of a poor endowment are often larger for children born in disadvantaged families. One interpretation of the results in this literature is that more advantaged families provide larger compensatory investment responses to adverse endowment shocks or at least are less reinforcing, compared with disadvantaged families. The evidence presented here supports this interpretation for the case of variation in parental investment responses to a LBW outcome by maternal education.

The findings in this study have important implications for the literature examining the impact of LBW on child outcomes. The well-known fetal origins hypothesis stresses the importance of fetal development in links between measures of fetal and infant health and later-life health outcomes (Barker 1990; Almond and Currie 2011a,b). However, social or environmental factors, which vary by a family’s socioeconomic status, may accentuate or attenuate the biological effects of LBW on child outcomes. David J. Barker argued that the “womb may be more important than the home” (Barker 1990), but parental investment responses to a LBW outcome that start early in the home environment may—depending on whose home it is—promote or prevent the development of some of the adverse consequences of being born with a LBW. For example, a possible outcome of the investment differences by maternal education uncovered in this study is that the adverse consequences of a LBW outcome may be exacerbated by low-educated mothers and mitigated by high-educated mothers. If true, studies that do not account for such heterogeneity in investment behavior may, on the one hand, identify the lower bounds of the effects of LBW on child outcomes for children born to high-educated mothers, but, on the other hand, identify the upper bounds of such effects for children born to low-educated mothers.

Acknowledgements I would like to thank the editor Erdal Tekin and three anonymous referees for very detailed feedback. This study is based on a dissertation chapter entitled Who Compensates and Who Reinforces? Parental Investment Responses to Child Endowment Shocks, which was completed at The Ohio State University. I would like to give special thanks to my dissertation advisor David Blau and my dissertation committee members Audrey Light and Bruce Weinberg. I would also like to thank Jérôme Adda, Christian Dustmann, Belton Fleisher, Trevon Logan, Derek Neal, Matthew Neidell, and Matthias Rieger for valuable comments and suggestions. This paper also benefitted from helpful comments by seminar participants at Cleveland State University and European University Institute, and by conference participants at the 2011 GLASS Research Symposium and 2011 Southern Economic Association Annual Meeting.

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Almond, Douglas and Currie, Janet. (2011a). 'Human Capital Development Before Age Five'.

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Almond, Douglas, Edlund, Lena and Palme, Marten. (2009). 'Chernobyl’s Subclinical Legacy:

Prenatal Exposure to Radioactive Fallout and School Outcomes in Sweden'. The Quarterly Journal of Economics 124 (4) 1729-1772.

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Ashenfelter, Orley and Rouse, Cecilia. (1998). 'Income, Schooling, and Ability: Evidence from a New Sample of Twins'. The Quarterly Journal of Economics 113 (1) 253-284.

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Barker, D.J. (1990). 'The Fetal and Infant Orgins of Adult Disease: The Womb May Be More Important Than The Home'. British Medical Journal, 301 (6761), p. 1111.

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Evidence from Randomly Assigned Adoptees.' American Journal of Health Economics 1 (3):


Becker, Gary S. and Tomes, Nigel. (1976). 'Child Endowments and the Quantity and Quality of Children'. The Journal of Political Economy, 84 (4), S143-S162.

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Behrman, Jere R., Rosenzweig, Mark R. and Taubman, Paul. (1994).'Endowments and the Allocation of Schooling in the Family and in the Marriage Market: The Twins Experiment'. The Journal of Political Economy 102 (6) 1131-1174.

Bharadwaj, Prashant, Eberhard, Juan, and Neilson, Christopher. (2014). 'Health at Birth, Parental Investments, and Academic Outcomes.' Unpublished Manuscript, University of California, San Diego.

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Blau, David M. (1999). 'The Effect of Child Care Characteristics on Child Development'. The Journal of Human Resources, 34 (4), 786-822.

Brooks-Gunn, Jeanne, Linver, Miriam R., and Yeung W. Jean. (2002). 'How Money Matters for Young Children's Development: Parental Investment and Family Processes'. Child Development, 73 (6) 1861-1879.

Buckles, Kasey and Kolka, Shawna. (2014). 'Prenatal investments, breastfeeding, and birth order'.

Social Science & Medicine 118: 66-70.

Carneiro, Pedro, Crawford, Claire, and Goodman, Alissa. (2007). 'Which Skills Matter', in D.

Kehoe, Practice Makes Perfect: The Importance of Practical Learning, Social Markets Foundation.

Case, Anne, Fertig, Angela, and Paxson, Christina (2005). 'The Lasting Impact of Childhood Health and Circumstance'. Journal of Health Economics 24 (2), 365-389.

Chatterji, Pinka, Kim, Dohyung, and Lahiri, Kajal. (2014a). 'Birth weight and academic achievement in childhood.' Health Economics 23 (9): 1013-1035.

––––––––––––. (2014b). 'Fetal growth and neurobehavioral outcomes in childhood.' Economics & Human Biology 15: 187-200.

Cheadle, Jacob, and Goosby, Bridget. (2010). 'Birth Weight, Cognitive Development, and Life Chances: A Comparison of Siblings from Childhood into Early Adulthood.' Social Science Research, 39 (4): 570-84.

Cook, C. Justin, and Fletcher, Jason M. (2015). 'Understanding heterogeneity in the effects of birth weight on adult cognition and wages.' Journal of Health Economics, 41: 107-116.

Conti, Gabriella, Heckman, James J., Yi, Junjian, and Zhang, Junsen. (2015). Early Health Shocks, Intra-household Resource Allocation and Child Outcomes '. Economic Journal 125 (588): F347–F371.

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