Infant Health, Cognitive Performance and Earnings: Evidence from Inception of the Welfare State in Sweden

We estimate impacts of exposure to a preventive infant health intervention trialled in Sweden in the early 1930s using purposively digitised birth registers linked to school catalogues, census files and tax records to generate longitudinal microdata that track 25,000 individuals through four stages of the life-course, from birth to age 71. This allows us to measure impacts on childhood health and cognitive skills at ages 7 and 10, educational choice during young adulthood, employment, earnings and occupation at age 36-40, and pension income at age 71. Leveraging quasi-random variation in eligibility by birth date and birth parish, we estimate that an additional year of exposure was associated with substantial increases in earnings and (public sector) employment among women, alongside no improvements for men. We also identify intervention effects on primary school test scores for men and women, and on secondary school completion for women only. A large part of the income gain for women can be attributed to secondary schooling and test score improvements, in particular at the top of the distribution. Using recent innovations in mediation analysis, we are able to show that school performance and secondary schooling enrollment are important mechanisms behind the adult gains in earnings. The greater investments of women in education are consistent with their comparative advantage in cognitive tasks, but opportunities are also likely to have played a role. Our sample cohorts were exposed to a massive expansion of the Swedish welfare state, which created unprecedented employment opportunities for women.