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Health and income: testing for causality on European elderly people

Author

Listed:
  • Amélie Adeline
  • Eric Delattre

    (Université de Cergy-Pontoise, THEMA)

Abstract

Socioeconomic status and health are positively related, also known as the "healthincome gradient". However, when considering the causal impact of income on health, the reverse causality might be at play. Income inequalities are an important factor in health inequality such that policy makers who aim at improving general health or narrowing inequalities using public policies, need to understand the sources and the direction of the causality between income and health. We thus investigate bivariate causal effects between the two by highlighting the Granger causality. Using the Survey of Health, Aging and Retirement in Europe (SHARE), we find evidence of persistent causal effects running from income to health and from health to income. Results, using a Full Information Maximum Likelihood estimator (FIML), suggest that considering a simultaneous equations approach is required because there are unobservable factors common to both equations in the individual e ects (statistically significant correlation between the two equations).

Suggested Citation

  • Amélie Adeline & Eric Delattre, 2018. "Health and income: testing for causality on European elderly people," THEMA Working Papers 2018-07, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2018-07
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    File URL: http://thema.u-cergy.fr/IMG/pdf/2018-07.pdf
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    Cited by:

    1. Kim, Hoolda & Mitra, Sophie, 2022. "Dynamics of health and labor income in Korea," The Journal of the Economics of Ageing, Elsevier, vol. 21(C).

    More about this item

    Keywords

    Granger causality; income; simultaneity; self-assessed health; FIML.;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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