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Impact of income inequality on health in middle and high income countries in 1991 – 2010

(A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS, VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS)


By Pham Dang Xuan Anh (VNP 20)

Academic Supervisor: Dr. Nguyen Van Ngai


Abstract: The income inequality and average heath of population level relation is tested in this paper with panel data of 48 high and middle income countries over 20 recent years. Evidence of significantly negative impact of income distribution on life expectancy at birth and positive impact on infant mortality rate has been found. Moreover, GDP per capita also has similar impact on heath in opposite directions. Even though the marginal effects are quantitatively small, results are found to be quite robust when controlling for endogeneity concerns and other issues.

Key words: Income inequality, life expectancy, infant mortality rate, health, human development, GDP per capita, secondary schooling, health spending, panel data.

Abbreviations: OECD - Organisation for Economic Co-operation and Development; WIID – World Income Inequality Database; UNU-WIDER – United Nations University-World Institute for Development Economics Research; CME – Child Mortality Estimates; IV – Instrumental Variable; IMR – Infant Mortality Rate; GDP – Gross Domestic Product; FE – Fixed Effects; RE - Random Effects; OLS – Ordinary Least Squared; LE – Life Expectancy; LM – Lagrange Multiplier; WHO – World Health Organisation; PPP - Purchasing Power Parities; GMM - Generalized Method of Moments

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