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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 ï¬rst 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
Date of revision:
Handle: RePEc:cor:louvco:2006045
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