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Health dynamics shape life-cycle incomes.

Rainer Kotschy1

  • 1LMU Munich, Munich, Germany; CESifo, Munich, Germany.

Journal of Health Economics
|December 7, 2020
PubMed
Summary

Major health improvements causally boost income growth and shape life-cycle earnings. Better health, education, and labor supply explain evolving income dynamics over working life.

Area of Science:

  • Health Economics
  • Sociology of Health

Background:

  • Significant advancements in public health have occurred over the past century.
  • Understanding the economic consequences of health improvements is crucial for policy-making.

Purpose of the Study:

  • To empirically investigate the long-run effects of major health improvements on income growth in the United States.
  • To provide novel evidence on how health dynamics shape life-cycle incomes.

Main Methods:

  • Utilized quasi-experimental variation in cardiovascular disease mortality across U.S. states over time.
  • Employed econometric modeling focusing on the white population to isolate exogenous health changes.

Main Results:

  • Established a causal link between improvements in health and per capita income.
Keywords:
AgeEducationLabor supplyLife expectancyMortalityProductivity

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  • Demonstrated that health dynamics significantly shape life-cycle income profiles.
  • Observed steeper income slopes at the beginning and end of working life in 2000 compared to 1960.
  • Conclusions:

    • Health improvements are a significant driver of income growth and economic well-being.
    • Changes in health, educational attainment, and labor supply have transformed income dynamics over the life cycle.
    • The findings highlight the economic returns of investing in public health initiatives.