Worms at Work: Long-run Impacts of Child Health Gain

We use experimental variation in a Kenyan deworming program to calibrate the Grossman (1972) model, in which health investments increase future endowments of healthy time, and estimate the labor market and fiscal impacts of such investments. Ten years after the start of the program, the treatment group has better self-reported health, consume more meals, spend more time in entrepreneurship, and are more likely to grow cash crops. Kenyan women who participated in the program as girls have fewer miscarriages and reallocate labor time from agriculture to entrepreneurship. Men who participated as boys work 3.4 more hours each week, and are more likely to hold manufacturing jobs with higher wage earnings. The deworming program generates positive externalities from reduced disease transmission. A calibration suggests that fully subsidizing deworming costs less than the additional net present value of government revenue it generates, creating an “expenditure Laffer effect” in which government subsidies for health investments allow for reduced tax rates.