Fetal Origins and Parental Responses (REVISED January 2013)
How do parental investments respond to health endowments at birth? Recent studies have combined insights from an earlier theoretical literature on household resource allocation with improved identification strategies to capture causal effects of early life health shocks. We describe empirical challenges in identifying behavioral responses and how recent studies have sought to address these. We then discuss the emerging literature on “dynamic complementarities” in parental investments arising from the staged, developmental nature of capability production and how capabilities may have multiple dimensions. The bulk of the empirical evidence to date suggests that parental investments reinforce initial endowment differences.