What are the effects on labour market outcomes later in life for those children who were in one of the most critical periods of the life cycle, i.e. the foetal stage, during the policy experiment? What can be said about the importance of investments early in life?
THERE WAS AN INCREASE IN ALCOHOL CONSUMPTION after the abolishment of the ration book in the autumn of 1955. In order to minimize the negative health effects of alcohol consumption, a number of measures were therefore introduced in the period 1960–1980 with the objective of changing the alcohol consumption pattern from hard liquor to beverages containing a lower level of alcohol. An example of such a policy measure was the policy experiment of selling of strong beer in Gothenburg and Bohus county and Värmland county that was implemented in November 1967 and which was run by the Alcohol Policy Commission. During this policy experiment, regular grocery stores were allowed to sell strong beer. What are the effects on labour market outcomes later in life for those children who were in one of the most critical periods of the life cycle, i.e. the foetal stage, during the policy experiment? What can be said about the importance of investments early in life?
THOSE CHILDREN WHO WERE EXPOSED to the experiment at the early stage of the pregnancy did later in life, on average, have considerably lower labour incomes, wages, education, cognitive and non-cognitive abilities as compared to children born in the counties where the policy experiment was conducted who were not exposed and as compared to children born in the rest of the country. The income effects are found in the major part of the income distribution, but are particularly striking below the median, and are larger among boys than among girls.
THE LONG-TERM EFFECTS seem to be primarily driven by the negative effects of the policy experiment on the foetal environment rather than by changes in the childhood environment. In particular, the results illustrate the importance of investments in critical periods of the children’s development, not only for later health but also for economic outcomes.
WHILE THE EFFECTS ON INCOMES and human capital among those who were themselves exposed in the foetal stage are considerable, there are no clear signs of any so-called transgenerational effects on the health of their own children.
AUTHOR J Peter Nilsson is Assistant Professor of Economics at the Institute for International Economic Studies (IIES) at Stockholm University and Research Fellow at Uppsala Center for Labor Studies (UCLS). E-mail: firstname.lastname@example.org.