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Long-Term Consequences of Early Life Health Shocks: Evidence from the 1980s Peruvian Crisis

During the Peruvian economic crisis of the late 1980s, infant mortality significantly increased. This paper investigates the long-term consequences on health and education for infants who survived this period. Because no longitudinal data are available, the estimation of causal effects is performed combining a difference-in-differences estimator with a two-sample instrumental variable approach. Results indicate that the detrimental health conditions associated with an additional percentage point in infant mortality makes children who survived the crisis 2.36 percentage points more likely to suffer a chronic illness and 2 percentage points less likely to complete primary education by age 15. A partial identification approach suggests that the attenuation bias due to selection for survival is relatively small.