Dynamic complementarities in infant health

Abstract

A large literature documents that early-life shocks may substantially affect health and labor market outcomes. However, we do not know much about how different shocks interact. In theoretical work, the idea of dynamic complementarities has been put forward, implying that the effect of a positive shock is larger for individuals with a higher baseline level of skills. With dynamic complementarities, negative shocks decrease the returns to subsequent investments for affected children. In this setting, universal interventions may in reality serve to strengthen initial differences. The policy relevance of understanding whether dynamic complementarities exist can therefore hardly be underestimated, but no clear answer has yet emerged from the literature. I utilize two arguably exogenous sources of variation in infant health in Norway between 1935 and 1945 to shed light on this question. The first shock is fetal exposure to seasonal influenza, which has been shown to negatively affect long-term health and labor market outcomes. The second shock is access to well-child visits, which is known to improve similar outcomes. Specifically, I ask whether fetal exposure to influenza reduces the long-term returns to mother and child health care centers. This is a particularly relevant question for policy-making because seasonal influenza is a frequent shock, yet easily preventable by means of vaccination. If influenza lowers the returns to a universal intervention like mother and child health care centers, inequality of opportunity could therefore be reduced by increasing vaccination rates among pregnant women. Using detailed individual-level registry data, I find little evidence of influenza affecting the educational or labor market returns to well-child visits. This lack of significant interaction effects could however be driven by the two shocks not affecting the outcomes of interest in my sample. Further research is therefore necessary in order to understand whether returns to mother and child health care centers are lower for infants who were exposed to maternal influenza.