Does rising income inequality affect mortality rates in advanced economies?

Mayvis Rebeira,Paul Grootendorst,Victor Aguirregabiria,Peter C Coyte

doi:10.5018/economics-ejournal.ja.2017-16

Mayvis Rebeira, Paul Grootendorst + Show 2 more

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https://doi.org/10.5018/economics-ejournal.ja.2017-16

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Journal: Economics	Publication Date: May 30, 2017
License type: CC BY 4.0

Affiliation: University of Toronto

Abstract

Abstract What effect does rising income inequality have on longevity in advanced developed economies? This paper focuses on the effect of income inequality on mortality rates for men and women in a subset of OECD countries over nearly six decades from 1950–2008. Using adult mortality rates at aged sixty-five as the outcome measure of mortality, the latest available data on inverted Pareto-Lorenz coefficient as a measure of income inequality, the authors conduct a range of analysis to investigate the relationship. The findings show that income inequality has a negative effect on mortality rates for both men and women, that is, an increase in income inequality at the top of the distribution does not appear to have a detrimental effect on adult mortality rates in the population of advanced developed countries. For every one unit increase in income inequality, female mortality rates decreased by 0.024 percentage points (p<=0.001) and male mortality rates decreased by 0.052 percentage points (p<=0.001). Dynamic OLS results show that for every one unit increase in income inequality, female mortality rates decreased by 0.032 percentage points (p<=0.01) and male mortality rates decreased by 0.067 percentage points (p<=0.001). The findings remain robust to changes in methodology and the inclusion of control variables including GDP, population and the health capital index.

Highlights

IntroductionAs income inequality has steadily increased over the past decades globally, this question has gained renewed prominence in current public discourse and academic research
Does an increase in income inequality at the top-end distribution in advanced economies result in a decrease in longevity? As income inequality has steadily increased over the past decades globally, this question has gained renewed prominence in current public discourse and academic research
It differs from previous studies in that (i) it centers on a sample of economically advanced economies with a long history of economic growth, democracy and underlying social welfare programs. (ii) It emphasis on income inequality at the top of the distribution

Summary

Introduction

As income inequality has steadily increased over the past decades globally, this question has gained renewed prominence in current public discourse and academic research This growing income inequality is partly attributed to increases in top wage incomes from the 1970s to the 1990s (Piketty and Saez, 2006) and it has been shown to affect economic growth (Kuznets, 1955), social capital, and social cohesion (Kennedy et al, 1998). (iii) The outcome variable of five-year adult mortality rate at aged sixty-five years offers a more concise measure of mortality for developed countries It incorporates a degree of quality of life gained from the social policies and benefits available to the individuals in these advanced economies. The methodology incorporates several different functional forms including a panel cointegration specification to address econometric challenges (Herzer and Nunnenkamp, 2015) This enables the investigation of the long-run effect of income inequality on mortality rates. Since the empirical study focuses at the population level, this enables the inclusion of country-level socio-economic controls

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