Three Essays on Health Economics: Applications to Human and Civic Capital

This thesis is the culmination of nearly three years of work on various topics, synthesized into a single piece. Consequently, I feel the need to explicitly convey to the reader how the chapters are connected and why they can unequivocally be labeled as essays on Health Economics. There are two reasons for this. In a first, linear and straightforward interpretation, it falls within the realms of this literature as it uses the “Economic Approach” to explore research questions related to health topics: namely, vaccines and contraceptive methods. To simplify reality and improve our understanding on individuals’ behaviour, I make use of models and assume individuals maximize some type of welfare under a set of restrictions to their actions (e.g. time, resources, memory, etc.) (Becker, 1993). In a second, potentially more holistic and profound interpretation of this work, the term "Economics" takes a different significance as we consider the relevance of the variables of interest in this study to phenomena that have intrigued economists from the very inception of the field, such as growth and development—more specifically, human and civic capital. Since the pioneering work of Becker, 1962 and Ben-Porath, 1967, human capital has been a core concept used by economists to explain key economic factors such as productivity and growth changes (Mincer, 1984). As defined by Goldin, 2016, human capital is “the stock of skills that the labor force possesses. The flow of these skills is forthcoming when the return to investment exceeds the cost.”. Relevant for the interpretation of this thesis, early childhood is a crucial phase in the formation of human capital (Heckman, Pinto, and Savelyev, 2013). Any shock at this stage is likely to have a substantial and persistent impact on future life outcomes, including health, education, labour market outcomes and social behaviors (Campbell et al., 2014; Currie and Almond, 2011; Heckman, 2007, 2008; Heckman, Stixrud, and Urzua, 2006). Conversely, social, or civic capital, as more precisely defined by Guiso, Sapienza, and Zingales, 2011a, refers to: “those persistent and shared beliefs and values that help a group overcome the free rider problem in the pursuit of socially valuable activities”. Broader conceptualizations have been used by economists to explain variations in growth (Knack and Keefer, 1997), financial development (Guiso, Sapienza, and Zingales, 2004), and the organization of firms (Bloom, Sadun, and Van Reenen, 2012), among many others. This work is divided into two parts. The first explores how improved access to contraceptive methods can influence the conditions of individuals at birth and their early childhood development, which has a significant impact on their future human capital. The second part delves into the importance of civic capital in overcoming the free-rider problem associated with public goods provision, particularly focusing on the Covid-19 vaccine uptake. In chapters one and two, which comprise the first part, I examine the profound implications of a nationwide policy implemented in Uruguay that improved women’s access to contraceptive methods. This initiative introduced subdermal implants, a long-acting contraceptive method (LARC) that was previously unavailable in the country. The exceptional effectiveness of this method compared to more commonly used methods, such as the pill and condoms, empowered participating women to have greater control over their fertility, helping them to align their intentions with their behavior. Unintended pregnancies, which are more frequent in disadvantaged households, exacerbate existing problems, perpetuating intergenerational disparities. However, policies that address socioeconomic inequalities often overlook the consequences of the decision to have a child. In chapter one, in collaboration with Juan Pereira, a PhD Candidate from Brown University, we use geolocated birth data to estimate the effect of policy on the number and characteristics of births, focusing on unintended pregnancies, parental investment, and newborn health outcomes. The results reveal a significant 14% reduction in births in the five years following the implementation of the policy, increasing to 30% by the end of the study. The decline is observed especially among younger, less educated women with more than two children. Unintended pregnancies decrease by 23% on average, with a notable increase of 4-6% in parental investment measures during gestation. Suggestive evidence of improvements in neonatal health outcomes is also found. These findings underscore the role of long-acting contraceptive methods in reducing unplanned pregnancies, even in contexts where abortion is legal, and financial barriers to access other methods are minimal. Moreover, they emphasize the immediate impact of policies guaranteeing women’s reproductive rights on newborn health outcomes and parental investment, ultimately contributing to enhanced socioeconomic development. In the second chapter, I extend the analysis to investigate the impact of having fewer siblings on early childhood development as a result of the same policy. Using survey and administrative data, and combining regression and matching techniques, I study what is the impact of having fewer siblings on a child’s early childhood development. The quantity and quality of children in a family are strongly related. The fewer children there are, the more resources there are to distribute among the existing children. My main results suggest that children who had fewer siblings as a consequence of this program are less likely to have development delays, especially related to problem resolution and gross and fine motor skills. In line with an increase in allocated resources, the results point to an earlier referral of the child to a care and education center as a possible mechanism. The main contribution of this study is to provide new evidence for the existence of a QQ trade-off that is already identifiable at very early stages of life. While previous studies have mainly analysed the impact of changes in the number of siblings on the quality of individuals in the medium and long term, this study focuses on early childhood developmental outcomes. Empowering women through reproductive rights not only benefits them but also positively influences the development of already born children, who receive increased time, attention, and resources. Taken together, these two chapters inform about the far-reaching impacts of providing access to high-quality family planning services on human capital formation. While we know that early childhood is a crucial phase in a human being’s life, these results highlight the importance of pre-conception policies for that matter. Finally, in the third chapter of my thesis, in collaboration with Prof. Tiziano Razzolini, we study the role that civic capital may play to overcome the free rider problem in the creation of public goods. Vaccination rates are likely to reflect the expected benefits and drawbacks for individuals. As a larger share of the population gets vaccinated, individuals have more incentives to free ride and benefit from the positive externalities of a high vaccination rate, while not being affected by the potential harms of receiving vaccination. Using Covid-19 vaccination data at the municipality level in the Italian region of Lombardy, we show that communities with a higher level of civic capital were able to overcome this collective action problem. An indirect measure of the willingness to contribute to a public good (i.e. the share of residents paying the TV licence) proves to be particularly useful to predict the success of vaccination campaigns. The findings of this chapter confirm that civic capital may represent a key element in overcoming the free rider problem in the provision of a public good, in this case high vaccination coverage. In particular, the empirical results indicate that information on local communities regarding pro-social behaviours (such as altruism) and willingness to contribute for the provision of a public good can be used to identify areas that should be specifically targeted by vaccination campaigns. To conclude, the initial aim of this chapter was to present the topics studied in this thesis and to provide the reader with a possible answer to a question that may arise during the reading of the thesis, and which I am often asked when presenting my work: “How is this Economics?”. In all honesty, I am aware that these arguments will be insufficient for some, as the areas that Economics should be concerned with differ from one individual to another. I hope, nevertheless, that this brief introduction has provided some clues on why the findings of this work are relevant to the socioeconomic development of individuals and societies. The purpose of the following chapters is to convince the reader of this.