Association for Public Policy Analysis & Management

A growing literature examines the long-term effects of early life environment but ignores conditions after the early life period. These results have a very specific interpretation and have limited ability to inform decisions about the relative efficiency of resources received in early life versus resources received in later life. I estimate the long-term effects of family income received at different stages in the life-cycle on health, by simultaneously accounting for income in all phases from conception up to the point at which health outcomes are measured in early adulthood. I construct a unique life-course data set from conception to age 32, using the Panel Study of Income Dynamics. Utilizing a 2-stage-least-squares framework, I instrument for family income with two instruments: simulated income and simulated Earned Income Tax Credit benefits. For health status as of age 32, I find that beneficial health effects are primarily from income received after age 18 and that caution is warranted when income from any phase is omitted.