Effects of Local Labor Market Conditions at Birth on Later Life Health and Health Behaviors

Social and economic conditions during childhood are linked with various outcomes in adulthood. Research shows that economic and health disparities arise early in life and get larger over time. However, little is known about the link between early life economic conditions and health during prime working ages.

We examine the long-term effects of local labor market conditions from birth to age 5 on health and risky health behaviors at prime working ages. We measure health outcomes using binary indicators of very good or excellent general health, the presence of physical limitations, and obesity. We measure risky behaviors through smoking status and alcohol consumption, including excessive drinking. We construct two versions of the Bartik instrument using data from the County Business Pattern and the Census to measure economic conditions during early childhood and link the Bartik indices to data from the Panel Study of Income Dynamics. We then use multivariate ordinary least squares regression to estimate the association between labor market conditions in childhood and outcomes in adulthood.

We find that better economic conditions in early childhood improve health in adulthood and reduce risky health behaviors. We also find important differences by parental education as well as by individuals' race and gender. Additionally, we examine several potential pathways through which economic conditions might affect health and find evidence of increased paternal income and labor supply as well as higher individual educational attainment and earnings.

Our findings highlight the importance of early childhood economic environments for long-term health and development. They point to the value of policies that support families with children during periods of economic hardship. This includes programs like Unemployment Insurance, which directly address labor market disruptions, as well as income support policies such as the Earned Income Tax Credit and the Child Tax Credit, which can buffer the effects of reduced household resources. By mitigating the long-term consequences of adverse early-life conditions, such policies may improve not only health outcomes but also broader adult wellbeing.