A Theory of Medicine Effectiveness, Differential Mortality, Income Inequality and Growth for Pre-Industrial England

CORE Discussion Paper No. 2006/45

32 Pages Posted: 8 Aug 2006

See all articles by David de la Croix

David de la Croix

Catholic University of Louvain (UCL) - Institut de Recherches Economiques et Sociales (IRES); Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Alessandro Sommacal

Universite Catholique de Louvain - Institut de Recherches Economiques et Sociales (IRES)

Date Written: May 2006

Abstract

We study how mortality reductions and income growth interact, looking at their relationship prior to the Industrial Revolution, when income per capita was stagnant. We first present a model of individual medical spending giving a rationale for individual health expenditures even when medicine was not effective in postponing death. We then explain the rise of effective medicine by a learning process function of expenditures in health. The rise in effective medicine can then be linked to the take-off of the eighteenth century through life expectancy increases, and fostered capital accumulation. The rise of effective medicine has also an impact on the relation between growth and inequality and on the intergenerational persistence of differences in income. These channels are operative through differential mortality induced by medicine effectiveness that turns out to determines a differential in the propensity to save among income groups.

Keywords: Differential mortality, Life expectancy, Propensity to save, Health expenditures

JEL Classification: J10, I12, D91, E13, N33

Suggested Citation

de la Croix, David and Sommacal, Alessandro, A Theory of Medicine Effectiveness, Differential Mortality, Income Inequality and Growth for Pre-Industrial England (May 2006). CORE Discussion Paper No. 2006/45, Available at SSRN: https://ssrn.com/abstract=922294 or http://dx.doi.org/10.2139/ssrn.922294

David De la Croix (Contact Author)

Catholic University of Louvain (UCL) - Institut de Recherches Economiques et Sociales (IRES) ( email )

3, Place Montesquieu
Louvain-la-Neuve, 1348
Belgium
+32 10 47 3945 (Fax)

HOME PAGE: http://www.de-la-croix.be

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Alessandro Sommacal

Universite Catholique de Louvain - Institut de Recherches Economiques et Sociales (IRES) ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium

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