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Life during growth : international evidence on quality of life and per capita income

  • Easterly, William

Remarkably diverse indicators show quality of life across nations to be positively associated with per capita income. But changes in quality of life as income grows are surprisingly uneven. Moreover, in either level or changes, the effect of exogenous shifts over time is surprisingly strong. It is possible that changes in a home country's quality-of-life indicators depend as much on changes in world income as on changes in home country growth. The improvement in life expectancy everywhere, for example, may have reflected technical breakthroughs in antibiotics associated with world economic growth. The strong results on exogenous time shifts point in this direction. The author reaches this conclusion using a panel data set of 81 indicators covering up to four periods (1960, 1970, 1980, and 1990). The indicators cover seven subjects: health, education, individual rights and democracy, political instability and war, transport and communications, inequality across class and gender, and"bads."With a seemingly unrelated regressions (SUR) estimator in levels, per capita income has an impact on the quality of life that is significant, positive, and more important than exogenous shifts for 32 of 81 indicators. With a fixed effects estimator, growth has an impact on the quality of life that is significant, positive, and more important than exogenous shifts for 6 of 69 quality-of-life indicators. The evidence that life gets better during growth is surprisingly uneven. The cross-country relationship between income and diverse indicators of the quality of life remains strong. The author speculates about explanations for the pattern of results, such as the long and variable lags that may come between growth and changes in the quality of life, and the possibility that global socioeconomic progress is more important than home country growth for many quality-of-life indicators.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2110.

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Date of creation: 31 May 1999
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Handle: RePEc:wbk:wbrwps:2110
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