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A theory of medicine effectiveness, differential mortality, income inequality and growth for pre-industrial England

  • DE LA CROIX, David
  • SOMMACAL, Alessandro

We study how mortality reductins and income growth interact, looking at their relationship prior to the Industrial Revolution, when income per capita was stagnant. We first present a model of individual medical spending giving a rationale for individual health expenditures even when medicine was not effective in postponing death. We then explain the rise of effective medicine by a learning process function of expenditures in health. The rise in effective medicine can then be linked to the take-off of the eighteenth century through life expectancy increases, and fostered capital accumulation. The rise of effective medicine has also an impact on the relation between growth and inequality and on the intergenerational persistence of differences in income. These channels are operative through differential mortality induced by medicine effectiveness that turns out to determines a differential in the propensity to save among income groups.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2006045.

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Date of creation: 00 May 2006
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Handle: RePEc:cor:louvco:2006045
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  2. Raouf BOUCEKKINE & David de la Croix & Omar LICANDRO, 2002. "Early mortality declines at the dawn of modern growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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  10. Mausumi Das & Shankha Chakraborty, 2010. "Mortality, Human Capital and Persistent Inequality," Working Papers id:2365, eSocialSciences.
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  14. Nils-Petter Lagerlöf, 2003. "From Malthus to Modern Growth: Can Epidemics Explain the Three Regimes?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 755-777, 05.
  15. Olivier F. Morand, 2002. "Economic Growth, Longevity, and the Epidemiological Transition," Working papers 2002-07, University of Connecticut, Department of Economics.
  16. Sebnem Kalemli-Ozcan, 2002. "Does the Mortality Decline Promote Economic Growth?," Macroeconomics 0212008, EconWPA.
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