Estimating Inter-Generational Returns to Medical Care: New Evidence from At-Risk Newborns

Targeted treatments of newborns with delicate health stocks have been shown to have consid­erable returns in terms of survival and later life outcomes. We seek to determine to what degree such treatments are transmitted across generations. We follow three generations of linked micro­-data from Chile, and use a regression discontinuity design to study the impacts of targeted neonatal health policies based on birth weight assignment rules. While we observe well­-known first gen­eration impacts of intensive treatment targeted to very low birth weight newborns, we document the surprising fact that these policies have negative impacts on measures of well­-being at birth for second-­generation individuals born to mothers who were treated at birth. We show that the mech­anism which explains this is a strong impact of early life medical treatment on the likelihood that marginal treated individuals go on to give birth later in life, with receipt in the first generation con­siderably reverting negative gradients in early life health and eventual fertility. These new stylised facts and results suggest the long­term implications of health policies within family lineages may be quite different to their short term implications, placing more weight on necessary reinforcing interventions.