Do Economic Inequalities Harm Health? Evidence from Europe

Centre for European Labour Market Research Discussion Paper No. 2007-13

31 Pages Posted: 3 Jun 2007

See all articles by Jean-Michel Etienne

Jean-Michel Etienne

Université Paris II - Panthéon-Assas - ERMES

Ali Skalli

Université Paris II - Panthéon-Assas - ERMES

Ioannis Theodossiou

University of Aberdeen - Business School

Date Written: March 2007

Abstract

Until recently, there has been a consensus among empirical health economists that there is an association between income inequality and individual health, in line with Wilkinson's (1992) idea that the psychosocial effects of the former are detrimental to the latter. However, using US data, Mellor and Milyo (2002) (MM) found no evidence of such association and claimed that the previously reported results are statistical artifacts, arising from the use of aggregate data. This paper uses the European Community Household Panel (ECHP) to check the robustness of MM results. It replicates the MM methodology to assess the effect of country-level income inequality on individuals' health. It is shown that income inequality, whether measured at the regional or the national level, systematically harms individuals' health, regardless of their positions in the income distribution.

The results are also robust to a number of aspects MM do not account for. First, random effect models are estimated to account for unobserved heterogeneity. Second, self-assessed and objective measures of health status are also considered. Third, besides the traditional aggregate measures of income inequality, a further measure is constructed reflecting first, how unequal the distribution is and second the relative position of individuals in the income distribution of their own country.

Keywords: Income inequality, individual health status, Income Inequality Hypothesis

JEL Classification: I12, D63

Suggested Citation

Etienne, Jean-Michel and Skalli, Ali and Theodossiou, Ioannis, Do Economic Inequalities Harm Health? Evidence from Europe (March 2007). Centre for European Labour Market Research Discussion Paper No. 2007-13, Available at SSRN: https://ssrn.com/abstract=989993 or http://dx.doi.org/10.2139/ssrn.989993

Jean-Michel Etienne (Contact Author)

Université Paris II - Panthéon-Assas - ERMES ( email )

12 Place du Panthéon
Paris, Cedex 5, 75005
France

Ali Skalli

Université Paris II - Panthéon-Assas - ERMES ( email )

92, rue d'Assas - F-75231 Paris Cedex 06
75 230 Paris, Cedex 5
France

Ioannis Theodossiou

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

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