Impact of Income Inequality on Health: Does Environment Quality Matter?
This paper examines the link between health indicators, environmental variables and income inequalities. Theoretically, all the mechanisms developed in the literature underline a negative impact of income inequality on health status. However, empirical studies find different results and the conclusions are far from a consensus. In this paper we investigate how environment degradation could be considered as a channel through which income distribution affects population health. We first develop a simple theoretical model based on Magnani (2000), in which relative income affects health status through the level of pollution abatement expenditures. Our econometric analysis shows that income inequalities negatively affect environmental quality and environment degradation worsens population’s health. This negative effect of income inequalities on environment is mitigated by good institutions. We also show that income inequalities negatively affect health status. Another interesting result is that when environmental variables are taken into account, the level and the statistical significance of the coefficient of income inequality variable vanish. This confirms that environment quality is an important channel through which income inequalities affect population health. These results hold for air pollution indicators (CO2 and SO2) and water pollution indicator (BOD). It is also robust for rich and developing countries. Countries with high income inequalities may implement distributive policies in order to avoid its negative impact on health.
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