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Better child health is widely thought to improve school performance, and therefore post-school productivity. But most of the literature ignores that child health as well as child schooling reflects behavioral choices. Therefore the estimated impact of child health on child schooling in these studies may be biased, perhaps substantially. This study employs longitudinal data to investigate the impact of child health (as indicated by nutritional status) on school enrollments in rural Pakistan using an explicit dynamic model for the preferred estimates. These estimates use price shocks when children were of preschool age to control for behavior determining the child health stock measure. They indicate that child health (nutrition) is three times as important for enrollment than suggested by "naive estimates" that assume that child health is predetermined rather than determined by household choices in the presence of unobserved factors such as preferences and health endowments. These results, therefore, reinforce strongly the importance of using estimation methods that are consistent with the economic theory of households to explore the impact of some choice variables on others using socioeconomic behavioral data.
Alderman et al. (Mon,) studied this question.