FAMILY BEQUESTS AND THE DERIVED DEMAND FOR HEALTH INPUTS

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Abstract

A family investment model whereby parents allocate resources among their own consumption, health investments and financial bequests to children is specified and used to develop hypotheses which are tested on cross section data. As predicted by the model, the demand for physician visits for young children is found to 1) depend on family income only up to some level (10,000 in 1969 in this case), 2) increase with maternal education, and 3) vary with price measures and family size. There is also evidence that greater health investments in young children pay off in fewer severe illnesses in young adulthood.

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