Monday, March 16, 2009

Income Distribution, Infant Mortality, and Health Care Expenditure

Tilman Tacke
Robert J. Waldmann

Do health outcomes not only depend on an individual's absolute level of income, but also on their relative income position within a society? We use infant mortality as a heath status indicator and find a significant and positive link between infant mortality and income inequality using cross-national data for 73 countries. Holding constant the income of each of the the poorest three quintiles of a country's population, we find that an increase in the income of the upper 20% of the income distribution is associated with higher, not lower infant mortality. Our results imply that, e.g., a one percentage point decrease in the income share of the richest quintile would decrease infant mortality by roughly one percent. The association of higher income of the rich and higher infant mortality becomes statistically insignificant when we control for health care expenditure. Our results indicate that the correlation between infant mortality and income inequality is partly explained by the fact that income inequality is high in countries where public investment in health care is low.

Full pdf here.

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