82 CHAPTER 4


interactions to investigate how the height effect changes as the child ages. The height-for-age z-score improves schooling while the effect becomes negative when the score is large. We also find that the effect diminishes as the child ages, particularly after age 9.


To interpret these findings, we must take into account two possibilities. First, if age was underreported in 1998 for some reason, the expected years of schooling completed in 2004 would be smaller, which makes it more likely to find a negative estimate of the height effect among those large children. Second, we cannot deny the possibility that large children have a high oppor- tunity cost of schooling as returns to their health capital are positive in the labor market or, more generally, in nonschool activities (though this point is not proven in this chapter). Note that the opportunity costs for those healthy children do not arise solely from strictly defined labor market activities, but also from nonschool activities, including informal work (usually not captured in statistics), household work, and crime.


The concavity found previously also suggests that parents are averse to inequality among siblings. Given that healthy (taller) children earn more in the labor market, parents may invest more in less healthy (shorter) children to decrease the inequality in human capital and future earnings. Recall that the aversion to inequality may be traced to the concavity of the parents’ utility function.


The observation that the height effect diminishes as the child ages sug- gests another possibility. If it is height-for-age before age 3 which matters most and height may also rebound afterward, height at an older age (still ≤5 years) explains fewer of the latter outcomes than height at earlier ages. Alter- natively, if returns to height (health capital) increase as the child ages, the incentive to work (to study) increases (decreases).


In columns 5–7, I compare within-sibling and within-sibling instrumental- variable estimates using the sample of children with z-scores below 2. Col- umn 6 uses as instruments the initial availability of healthcare personnel interacted with age, whereas column 7 uses the weight-for-age z-score. It is found in columns 5 and 6 that the instrumental-variable estimate for the height-for-age z-score effect is greater than the within-sibling effect, which suggests downward bias. Higher endowment in academic performance is negatively correlated with early-childhood health capital.19 Though the dif- ference might have captured measurement errors in reported grades com- pleted, this possibility is less likely than in the case of age schooling started.


19 Our result shows that higher health endowment discourages academic advancement, probably because there is another incentive for well-endowed children to participate in activities outside school.


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