Health policy encouraging birth in hospital versus home not only increases an individual’s chances of survival in the first seven days of life but also results in better health and productivity by their 65th birthday, according to a study by Volha Lazuka, to be presented at the annual congress of the European Economic Association in 2020.

Using rich administrative data for Sweden, Lazuka analyses the effects of a ‘natural experiment’ – a Swedish childbirth reform in the 1930s and 1940s that subsidised new maternity wards and made childbirth free of charge.

This study finds that this reform made childbirth healthier and prevented up to two-thirds of neonatal deaths. It then follows surviving children through their life, through contemporary Sweden in the 1960s to 2010s. The finding is striking: individuals born in a new hospital compared to those born in the same year and the same municipality but at home have 22–28% higher earnings in their adulthood. 

This study has direct policy implications for optimal allocation of social resources. It is particularly relevant for most developing countries today that undergo or plan changes that Sweden experienced a century ago.

Not least, it is relevant for developed countries that currently centralise childbirth facilities. State investments in hospital deliveries – that are quality and accessible – bear large benefits through increased neonatal survival, and spill over to better health and productivity when treated persons reach their adulthood.


There are growing epidemiological and economic studies that conclude that particular ages in early childhood are critical for development of health and wellbeing in the rest of one’s life. 

Lazuka’s study is the first to show that better care at a hospital facility in the first seven days of life determine much of success in working ages. It investigates the consequences of the childbirth reform in Sweden 1931-46 that subsidised new maternity wards and made childbirth free. New hospitals admitted 38% more deliveries. A similar shift occurred in Asia and Africa in the previous decade where hospital births increased from 39% to 79%.

Lazuka finds that the Swedish reform substantially reduced neonatal mortality by 14-21 deaths per 1,000 live births or up to two-thirds of mortality prior to the reform. Neonates were saved from preventable death due to infection, preterm birth and low birth weight. While expansion of hospitals gave room for more surgical operations at childbirth, they were healthy. 

Children born both in the hospital and at home are further followed until their 65th birthday. Lazuka finds that the long-term effects of the Swedish reform show up in better health, education and earnings of the survivors.

In particular, individuals born in a new hospital compared with those born in the same year and the same municipality but at home have 22-28% higher earnings in their adulthood. Due to the reform, these individuals are also much less likely to be on disability (45-49%) or unemployed (46-50%), They are more likely to have secondary education (15-16%) and spent fewer nights in the hospital through adulthood (32-39%). 

Lazuka’s study bears direct policy implications for optimal resource allocation and for design of health policy. Social investments in quality childbirth facilities yield returns not only in terms of saved neonatal lives but also in terms of human capital and income growth in a long term. 

In this study, the effects for small-scale maternity wards are the largest, and are eaten up by overcrowding in large maternity hospitals, and by the lack of quality personnel in the private wards. Therefore, focus on facility infrastructure, specialised services and accessibility is crucial in childbirth policy design with a long-term view.



Volha Lazuka

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