Is there Complete, Partial or no Recovery from Childhood Malnutrition? - Empirical Evidence from Indonesia

Subha Mani, University of Southern California

The paper captures the extent to which children are able to recover from some of the long-term deficits in health outcomes caused by childhood malnutrition. A dynamic conditional health demand function is estimated, where the coefficient on the one-period lagged health status captures the extent of recovery, if any, from childhood malnourishment. The OLS parameter estimate on lagged health status is 0.53 and it reduces to 0.23 using a first-difference GMM approach, indicating an upward bias in the OLS parameter estimate. A coefficient of 0.23 indicates that poor nutrition at young ages, will cause some, but not severe, retardation in the growth of future height indicating partial catch-up effects. The first-difference GMM strategy used here is especially attractive in this context as it relies on much weaker stochastic assumptions than earlier papers and addresses both omitted variables bias and measurement error bias in data.