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Induced Innovation and Social Inequality: Evidence from Infant Medical Care

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  • David M. Cutler
  • Ellen Meara
  • Seth Richards

Abstract

We develop a model of induced innovation where research effort is a function of the death rate, and thus the potential to reduce deaths in the population. We also consider potential social consequences that arise from this form of induced innovation based on differences in disease prevalence across population subgroups (i.e. race). Our model yields three empirical predictions. First, initial death rates and subsequent research effort should be positively correlated. Second, research effort should be associated with more rapid mortality declines. Third, as a byproduct of targeting the most common conditions in the population as a whole, induced innovation leads to growth in mortality disparities between minority and majority groups. Using information on infant deaths in the U.S. between 1983 and 1998, we find support for all three empirical predictions. We estimate that induced innovation predicts about 20 percent of declines in infant mortality over this period. At the same time, innovation that occurred in response to the most common causes of death favored the majority racial group in the U.S., whites. We estimate that induced innovation contributed about one third of the rise in the black-white infant mortality ratio during our period of study.

Suggested Citation

  • David M. Cutler & Ellen Meara & Seth Richards, 2009. "Induced Innovation and Social Inequality: Evidence from Infant Medical Care," NBER Working Papers 15316, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15316
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    References listed on IDEAS

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    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
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    8. Michael Kremer, 2002. "Pharmaceuticals and the Developing World," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 67-90, Fall.
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    Cited by:

    1. Lazuka, Volha, 2017. "Infant health and later-life labour market outcomes : Evidence from the introduction of sulfa antibiotics in Sweden," Lund Papers in Economic History 154, Lund University, Department of Economic History.
    2. Elder Todd E & Goddeeris John H & Haider Steven J, 2011. "A Deadly Disparity: A Unified Assessment of the Black-White Infant Mortality Gap," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-44, June.
    3. Raphaël Godefroy, 2010. "The birth of the congressional clinic," PSE Working Papers halshs-00564921, HAL.
    4. GODEFROY, Raphaël, 2018. "The birth of the congressional clinic," Cahiers de recherche 2018-11, Universite de Montreal, Departement de sciences economiques.
    5. Deepak Hegde & Bhaven Sampat, 2015. "Can Private Money Buy Public Science? Disease Group Lobbying and Federal Funding for Biomedical Research," Management Science, INFORMS, vol. 61(10), pages 2281-2298, October.
    6. Sampat, Bhaven N., 2012. "Mission-oriented biomedical research at the NIH," Research Policy, Elsevier, vol. 41(10), pages 1729-1741.
    7. Raphaël Godefroy, 2010. "The birth of the congressional clinic," Working Papers halshs-00564921, HAL.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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