Francesca Zantomio, from University of Venice, will present her research. 

Does income change the development path of a low birth weight child?

Cheti Nicoletti, Kjell Salvanes , Emma Tominey , Francesca Zantomio

 We study the long-term effect of an exogenous injection of income resources in early infancy to investigate whether income can mitigate the detrimental consequences of a low birth weight (a measure of initial child endowment). We address the double endogeneity of birth weight and income by using twin difference estimation on the one hand and by exploiting a natural resource boom on the other. Namely, we consider the 70s Norwegian Oil Shock, which resulted in a semi-permanent income shocks. We exploit geographical variation in local labour markets exposure to this boom for cohorts of same-sex twins born in the first decade of oil extraction in Norway. Using Norwegian Registry data, linked to the Medical Birth Registry, we estimate the interaction effect of income shock and starting skills in producing skills at later ages. Results suggest that that the oil shock had an attenuation effect on the detrimental consequences of low birth weight.