Child health and income gradient in Australia: The role of chronic conditions

In this paper we utilise data from the Longitudinal Study of Australian (LSAC) to examine the question of how the income-child health gradient, which has attracted much attention from the researchers in recent years, may be explained. Our results show that a previous health shock, as measured by chronic conditions, increases the probability of a child being reported as being in poor health in current period. We find that income has a protective effect on child health, but our interaction term of family income and the lagged health shock is not statistically signicant. Therefore, our results do not provide any evidence that low-SES households are less able to manage a health shock than the high-SES household. Interestingly, we also do not find any convincing evidence that low-SES Australian children are subject to more health shocks. We speculate that the extensive and universal public healthcare system in Australia may offset some of the important health-related disadvantages that are associated with low incomes in other countries.