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The effect of income growth and inequality on health inequality: Theory and empirical evidence from the European Panel

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  • Van Ourti, Tom
  • van Doorslaer, Eddy
  • Koolman, Xander

Abstract

Governments of EU countries have declared that they would like to couple income growth with reductions in social inequalities in income and health. We show that, theoretically, both aims can be reconciled only under very specific conditions concerning the type of growth and the income responsiveness of health. We investigate whether these conditions were met in Europe in the 1990s using panel data from the European Community Household Panel. We demonstrate that (i) in most countries, the income elasticity of health was positive and increases with income, and (ii) that income growth was not pro-rich in most EU countries, resulting in small or negligible reductions in income inequality. The combination of both findings explains the modest increases we observe in income-related health inequality in the majority of countries.

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  • Van Ourti, Tom & van Doorslaer, Eddy & Koolman, Xander, 2009. "The effect of income growth and inequality on health inequality: Theory and empirical evidence from the European Panel," Journal of Health Economics, Elsevier, vol. 28(3), pages 525-539, May.
  • Handle: RePEc:eee:jhecon:v:28:y:2009:i:3:p:525-539
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    1. Alexander Kemnitz, 2013. "A Simple Model of Health Insurance Competition," German Economic Review, Verein für Socialpolitik, vol. 14(4), pages 432-448, November.
    2. Paul Allanson & Dennis Petrie, 2011. "On decomposing the causes of changes in income-related health inequality with longitudinal data," Dundee Discussion Papers in Economics 250, Economic Studies, University of Dundee.
    3. Wang, Kuan-Min, 2011. "Health care expenditure and economic growth: Quantile panel-type analysis," Economic Modelling, Elsevier, vol. 28(4), pages 1536-1549, July.
    4. David Madden, 2010. "Ordinal and cardinal measures of health inequality: an empirical comparison," Health Economics, John Wiley & Sons, Ltd., vol. 19(2), pages 243-250.
    5. Guillem López i Casasnovas & Marina Soley Bori, 2012. "The Economic Crisis and it Effects on the Social Determinants of Health," Hacienda Pública Española, IEF, vol. 201(2), pages 113-132, June.
    6. Heckley, Gawain & Gerdtham, Ulf-G. & Kjellsson, Gustav, 2016. "A general method for decomposing the causes of socioeconomic inequality in health," Journal of Health Economics, Elsevier, vol. 48(C), pages 89-106.
    7. Sato, Azusa, 2012. "Do Inequalities in Health Care Utilization in Developing Countries Change When We Take into Account Traditional Medicines?," World Development, Elsevier, vol. 40(11), pages 2275-2289.
    8. Costa-Font, Joan & Hernández-Quevedo, Cristina, 2012. "Measuring inequalities in health: What do we know? What do we need to know?," Health Policy, Elsevier, vol. 106(2), pages 195-206.
    9. Siegel, Martin & Vogt, Verena & Sundmacher, Leonie, 2014. "From a conservative to a liberal welfare state: Decomposing changes in income-related health inequalities in Germany, 1994–2011," Social Science & Medicine, Elsevier, vol. 108(C), pages 10-19.
    10. Baeten, Steef & Van Ourti, Tom & van Doorslaer, Eddy, 2013. "Rising inequalities in income and health in China: Who is left behind?," Journal of Health Economics, Elsevier, vol. 32(6), pages 1214-1229.
    11. Mary Schooling, C. & Lau, Elaine W.L. & Tin, Keith Y.K. & Leung, Gabriel M., 2010. "Social disparities and cause-specific mortality during economic development," Social Science & Medicine, Elsevier, vol. 70(10), pages 1550-1557, May.
    12. Lahiri, Kajal & Pulungan, Zulkarnain, 2007. "Income-related health disparity and its determinants in New York state: racial/ethnic and geographical comparisons," MPRA Paper 21694, University Library of Munich, Germany.
    13. repec:bla:ecorec:v:94:y:2018:i:304:p:39-50 is not listed on IDEAS
    14. Roselinde Kessels & Guido Erreygers, 2014. "A unified structural equation modeling approach for the decomposition of rank-dependent indicators of socioeconomic inequality of health," EcoMod2014 7065, EcoMod.
    15. Gustav Kjellsson & Dennis Petrie & Tom (T.G.M.) van Ourti, 2018. "Measuring income-related inequalities in risky health prospects," Tinbergen Institute Discussion Papers 18-007/V, Tinbergen Institute.
    16. Roselinde Kessels & Guido Erreygers, 2016. "Structural equation modeling for decomposing rank-dependent indicators of socioeconomic inequality of health: an empirical study," Health Economics Review, Springer, vol. 6(1), pages 1-13, December.
    17. Brekke, Kjell Arne & Kverndokk, Snorre, 2014. "Health contingent income transfers. Are they relevant?," HERO On line Working Paper Series 2014:5, Oslo University, Health Economics Research Programme.
    18. Kajal Lahiri & Zulkarnain Pulungan, 2006. "Health Inequality and Its Determinants in New York," Discussion Papers 06-03, University at Albany, SUNY, Department of Economics.
    19. Allanson, Paul & Petrie, Dennis, 2013. "Longitudinal methods to investigate the role of health determinants in the dynamics of income-related health inequality," Journal of Health Economics, Elsevier, vol. 32(5), pages 922-937.
    20. ERREYGERS, Guido & KESSELS, Roselinde, 2013. "Regression-based decompositions of rank-dependent indicators of socioeconomic inequality of health," Working Papers 2013007, University of Antwerp, Faculty of Applied Economics.
    21. Hongliang Wang & Yiwen Yu, 2016. "Increasing health inequality in China: An empirical study with ordinal data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(1), pages 41-61, March.
    22. Max Coveney & Pilar Garcia Gomez & Eddy Van Doorslaer & Tom Van Ourti, 2015. "Health Disparities by Income in Spain before and after the Economic Crisis," Tinbergen Institute Discussion Papers 15-130/V, Tinbergen Institute.
    23. France Weaver & Judite Goncalves & Valerie-Anne Ryser, 2015. "Socioeconomic inequalities in subjective well-being among the 50+: contributions of income and health," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 15011, Institut d'Economie et Econométrie, Université de Genève.
    24. Mototsugu Fukushige & Noriko Ishikawa & Satoko Maekawa, 2012. "A modified Kakwani measure for health inequality," Health Economics Review, Springer, vol. 2(1), pages 1-7, December.

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