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Explaining the Health Equality Paradox of the Welfare State

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Author Info

  • Brekke, Kjell Arne

    ()
    (Department of Economics, University of Oslo)

  • Grünfeld, Leo A.

    ()
    (Oslo School of Management & MENON Business Economics)

  • Kverndokk, Snorre

    ()
    (Ragnar Frisch Centre for Economic Research, UiO)

Abstract

A growing body of empirical studies have reported that social inequalities in health are as large (or even larger) in the Nordic welfare states than in many less egalitarian societies. This is highly surprising since the welfare state is rooted in income equality, free access to education and health services, and a generous social benefit system. This paper reviews this literature, and provides an explanation of this paradox based on the most common causal mechanism studied, namely the one that goes from income (or another socio economic variable) to health. We start by showing that the concentration index is much more sensitive to health contingent income transfers than income contingent health transfers. Then, we introduce a simple model where health is caused by status (relative income) and show that there actually exists as possibility that stratified societies may have lower health inequality than egalitarian societies, everything else equal, if class is unobservable. Thus, there may be a tradeoff between income and health equality. However, due to the insensitivity of the concentration index of health transfers, this tradeoff may not be shown by such inequality measures. A higher social health inequality as found in empirical studies, may therefore just be a sign of a more equal income distribution.

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Bibliographic Info

Paper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2011:3.

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Length: 26 pages
Date of creation: 25 Oct 2011
Date of revision:
Handle: RePEc:hhs:oslohe:2011_003

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Postal: HERO / Institute of Health Management and Health Economics P.O. Box 1089 Blindern, N-0317 Oslo, Norway
Phone: 2307 5309
Fax: 2307 5310
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Web page: http://www.hero.uio.no/eng.html
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Keywords: Income inequality; health inequality; socioeconomic status; welfare states; concentration index;

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References

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  11. Kjell Arne Brekke & Snorre Kverndokk, 2012. "Inadequate Bivariate Measures of Health Inequality: The Impact of Income Distribution," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(2), pages 323-333, 06.
  12. Eddy van Doorslaer & Xander Koolman, 2004. "Explaining the differences in income-related health inequalities across European countries," Health Economics, John Wiley & Sons, Ltd., vol. 13(7), pages 609-628.
  13. Jusot, Florence & Kunst, Anton E. & Leinsalu, Mall & Menvielle, Gwenn & Schaap, Maartje M. & Roskam, Albert-Jan R. & Stirbu, Irina & Mackenbach, Johan P., 2008. "Socioeconomic Inequalities in Health in 22 European Countries," Economics Papers from University Paris Dauphine 123456789/10510, Paris Dauphine University.
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