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Income Distribution and Health Status: Econometric Evidence from OECD Countries (Organisation for Economic Co-Operation and Development) (Report)

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eBook details

  • Title: Income Distribution and Health Status: Econometric Evidence from OECD Countries (Organisation for Economic Co-Operation and Development) (Report)
  • Author : American Journal of Applied Sciences
  • Release Date : January 01, 2007
  • Genre: Engineering,Books,Professional & Technical,
  • Pages : * pages
  • Size : 208 KB

Description

INTRODUCTION In recent years, economists, health experts and health policy makers have been interested in understanding why some countries and societies enjoy better health status as reflected by prolonged life expectancy and lower infant mortality. Equity in health has been extensively discussed by health scholars (2,4.10,15,22). Knowledge of the main determinants of health status and their quantitative impact aids in the formulation of effective policies aimed at enhancing the level of health status in both developed and developing countries. One of the important factors, both at the individual and aggregate level that has been theoretically identified is the degree of income inequality. In the literature, it has been shown theoretically and empirically, that health status is not only being influenced by the level of absolute income, but also by the relative income (1,8,13, 14,16,17,24-26). Also, in the literature, while most of the studies were undertaken by using the correlation analysis, in this research note regression analysis is employed. While the absolute income hypothesis contends that the higher the level of an individual's per capita real income, the better his or her health status, the relative income hypothesis states that an individual's health status is influenced adversely by the degree of income inequality within the economy. Income inequality is said to affect health status inversely, given the effects of other determinants. The main objective of this research note is to estimate the impact of income inequality on heath status, employing Ordinary Least Squares (OLS) method, for the reference year 2002, utilizing the most recent and relevant data on a cross-section of 27, both the original and newly ratified Organization for Economic Cooperation and Development (OECD) countries. The countries that are included in the study are Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Korea, Mexico, Netherlands, Poland, Portugal, Slovia Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States of America. In the literature, there have been empirical attempts to measure the relationship between income inequality and population average health status, called the "concavity effect" and the effect of income inequality per se, on health status, referred to as the "pollution effect" (23). Strictly speaking, to quantify the impact of the above mentioned effects, one needs to conduct a multilevel analysis. The multilevel analysis is not undertaken here due to paucity of data on health status and income at both individual and aggregate levels in the countries studied. The measure of income inequality that is used for empirical estimation in this research note is the share of income received by the lowest 10 percent of the population (LTNPRD). The incorporation of some control variables in the specified model that were not considered in similar studies and the employment of a robust econometric estimating technique, such as the Least Absolute Error Estimator (LAE), is highly warranted in the presence of outliers. It is widely known in the econometric literature, that outliers can have a substantial influence on both the parameter estimates and their standard errors in a regression model. Specifically the research note has estimated the impact of income inequality on the level of health status, as measured by infant mortality (INFMR), given the following control variables: the per capita real GDP (INCOME), the number of physicians (DOC), the level of education (EDU) and the percentage of female smokers in adult population (SMOKFL).


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