Early Health Shocks, Intra‐household Resource Allocation and Child Outcomes

In response to health shocks, parents make compensatory and reinforcing investments in different dimensions of human capital across children. Using household data on Chinese child twins whose average age is 11, we find that, compared with the twin sibling who did not suffer from negative early health shocks at age 0–3, the other twin sibling who did received 305 yuan more health investment, but received 182 yuan less educational investment. Overall, the family acts as a net equaliser in response to child early health shocks across children.