August 2008

IZA DP No. 3646: The Role of Childhood Health for the Intergenerational Transmission of Human Capital: Evidence from Administrative Data

revised version published as 'The Relationship between Child Health, Developmental Gaps, and Parental Education: Evidence from Administrative Data' in: Journal of the European Economic Association, 2012, 10 (6), 1425-1449

We use unique administrative German data to examine the role of childhood health for the intergenerational transmission of human capital. Specifically, we examine the extent to which a comprehensive list of health conditions – diagnosed by government physicians – can account for developmental gaps between the children of college educated parents and those of less educated parents. In total, health conditions explain 18% of the gap in cognitive ability and 65% of that in language ability, based on estimations with sibling fixed effects. Thus, policies aimed at reducing disparities in child achievement should also focus on improving the health of disadvantaged children.