Kiel Working Papers, Kiel Institute for World Economics
No 1736:
Income Inequality and Health: New Evidence from Panel Data
Dierk Herzer and Peter Nunnenkamp
Abstract: This paper argues that previous cross-country (panel)
studies on the relationship between income inequality and health suffer
from significant biases due to (i) omitted country-specific factors, (ii)
endogeneity, and (iii) cross-country heterogeneity in the impact of
inequality on health. Using panel cointegration techniques that are robust
to omitted variables, endogenous regressors, and slope heterogeneity, we
find that income inequality has, on average, a small, but robust and
statistically significant positive impact on population health. Also, there
is some evidence that inequality is endogenous in the sense that poor
health leads to increased income inequality. Finally, we find that there
are large cross-country differences in the effect of income inequality on
health (in about 35 percent of the cases, the effect is negative
Keywords: Health; Inequality; Panel cointegration; (follow links to similar papers)
JEL-Codes: I14,; C23; (follow links to similar papers)
34 pages, October 2011
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