Reducing Inequality Through Complementarities in Investments in Education and Health

Childhood inequalities in education, income, and physical and mental health have been increasing during the past decades and pose considerable challenges to well-being. Therefore, there is an acute need for rigorous research to inform the design of cost-effective policies to address early-life inequalities. This project studies whether different policies and different combinations of policies can level the playing field between poor and rich children. The project's first result shows that low-cost policies, such as well-child visits or early-life healthcare access, are lowering inequalities. The project uses Norwegian administrative data and historical documents to show that infant healthcare has sustainable, long-term effects. Individuals who receive access early in life have higher education, higher income, and better health as adults. These effects are significantly larger for individuals from a poor background, and the positive effects even spill over to their children. Moreover, infant healthcare compensates for health inequalities from in-utero exposure to infectious diseases. The second set of results shows that policies for treating mental health have profound effects on labor market outcomes. Moreover, the project documents intergenerational persistence in mental illness and that low-cost policies targeted at young children of individuals diagnosed with mental health issues lower the intergenerational persistence of mental health diagnoses. In addition, the project documents that attending a more selective high school improves mental health outcomes in the long run. Last, the project documents pollution inequalities and uses a novel method to test for complementarities in pollution exposure to sulfur dioxide. Overall, the project's findings benefit policy-makers globally by informing the design of early life policies that reduce social, economic, and health inequalities cost-effectively.

The project used administrative data from Norway paired with different interventions to empirically answer whether there is a dynamic component to human capital formation and in which periods human capital may be particularly vulnerable to interventions. Hence, the project contributes to the international economic research frontier and policy debate on dynamic complementarities. Moreover, the project's results developed a novel empirical approach to pinpoint sensitive periods in a more generalized setting. Hence, the project's results will contribute to a new understanding of the underlying mechanisms behind observed health, education, and income disparities beyond the project duration. In particular, the project led to six published papers and nine projects that are still in the publication process. From society's perspective, our results can inform policymakers about the costs and benefits of specific policies or have the potential to create or improve policies. The project's results entered the policy domain. For example, one of the papers is cited in the newest Economic Report of the President of the United States, and the project has also produced more than 190 media articles, including articles by prominent outlets such as the New York Times, PBS Nova, Scientist Magazine, Telegraph, The Atlantic, The Washington Post, WSJ editorial, The Weeds (Vox), The Guardian, Dagens Næringsliv, Aftenposten, El País, Al Jazeera, and Deutschlandradio.

In the past decades, many Western societies have experienced a sharp increase in inequalities along many dimensions, including education, income, and physical and mental health. These inequalities pose considerable challenges for the wellbeing of recent cohorts, and there is an acute need for rigorous research to inform the design of cost-effective policies to address them. Such research is, however, complex and requires a deep understanding of the causal processes underlying these inequalities. In this project, we aim to understand the dynamic processes through which multiple policies interact in affecting the emergence and evolution of inequalities. Causally identifying interactions among policies requires (quasi)randomization in multiple periods or across multiple policies. To date, only a handful of papers were able to overcome this obstacle. In this project, we make use of administrative data from Norway paired with different interventions that allow us to empirically answer whether there is a dynamic component to human capital investment and in which periods human capital may be particularly affected by interventions. In particular, we study complementarities in infant health, early-life education, nutrition, and mental health and we will carry out four separate projects answering whether: (1) infant health care offsets damages from in utero disease exposure, (2) access to educational TV increase the returns to early child care, (3) health endowments alter the effects of high-caloric nutrition shocks, and (4) there are dynamic complementarities in mental health. The unique combination of knowledge about policy interventions or health shocks and high-quality register data will enable us to contribute to the international research frontier in labor and health economics. Additionally, our research will benefit policy-makers by informing the design of early life policies that can reduce social, economic and health inequalities.