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The Importance of Individual Heterogeneity in the Decomposition of Measures of Socioeconomic Inequality in Health: An Approach Based on Quantile Regression

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Author Info
Andrew M. Jones
Ángel López-Nicolás

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Abstract

This paper shows how recently developed regression-based methods for the decomposition of health inequality can be extended to incorporate individual heterogeneity in the responses of health to the explanatory variables. We illustrate our method with an application to the Canadian NPHS of 1994. Our strategy for the estimation of heterogeneous responses is based on the quantile regression model. The results suggest that there is an important degree of heterogeneity in the association of health to explanatory variables which, in turn, accounts for a substantial percentage of inequality in observed health. A particularly interesting finding is that the marginal response of health to income is zero for healthy individuals but positive and significant for unhealthy individuals. The heterogeneity in the income response reduces both overall health inequality and income related health inequality.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Working Papers, Research Center on Health and Economics with number 626.

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Date of creation: Jun 2002
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Handle: RePEc:upf:upfses:626

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Related research
Keywords: Health inequalities; unobserved heterogeneity; quantile regression;

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Find related papers by JEL classification:
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior

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  5. Jason Abrevaya, 2001. "The effects of demographics and maternal behavior on the distribution of birth outcomes," Empirical Economics, Springer, vol. 26(1), pages 247-257. [Downloadable!] (restricted)
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