Abstract

The paper addresses the controversial issue of health measurement using latent variables. Following issues are explored (i) child health is unobservable but can be represented by observed health indicators (ii) different indicators represent different underlying health states (iii) permanent health has a positive impact on transitory health deviations. The results show that empirically there is a distinction between child health states: permanent and transitory. Child's permanent health has a positive impact on transitory health deviations.

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