Birth weight and vulnerability to a macroeconomic crisis

tThis paper shows that early-life health is an important determinant of labor market vulnerability duringmacroeconomic downturns. Using data on twins during Sweden’s crisis of the early 1990s, we show thatindividuals with higher birth weight are differentially less likely to receive unemployment insurancebenefits after the crisis as compared to before it, and that this effect is concentrated among workers inthe private sector. While differences in early-life health thus lead to increased inequality in employmentoutcomes, we also find that there is no differential effect of birth weight on total income after the crisis.This suggests that in the context of Sweden, the social safety net is able to mitigate the effects of early-lifehealth on labor market outcomes during economic downturns.