Beyond the mean: Distributional differences in earnings and mental health in young adulthood by childhood health histories

Abstract

Research on the long-term effects of health in early life has predominantly relied on parametric methods to assess differences between groups of children. However, this approach leaves a wealth of distributional information untapped. The objective of this study was to assess distributional differences in earnings and mental health in young adulthood between individuals who suffered a chronic illness in childhood compared to those who did not using the non-parametric relative distributions framework. Using data from the Panel Study of Income Dynamics, we find that young adults who suffered a chronic illness in childhood fare worse in terms of earnings and mental health scores in adulthood, particularly for individuals reporting a childhood mental health/developmental disorder. Covariate decompositions suggest that chronic conditions in childhood may indirectly affect later outcomes through educational attainment: had the two groups had similar levels of educational attainment, the proportion of individuals with a report of a chronic condition in childhood in the lower decile of the relative earnings distribution would have been reduced by about 20 percentage points. Findings may inform policy aimed at mitigating longer run effects of health conditions in childhood and may generate hypotheses to be explored in parametric analyses.