Does income inequality really influence individual mortality? Results from a ‘fixed effects analysis’ where constant unobserved municipality characteristics are controlled
Demographic Research 18, 2008, pages 205-232
There is still much uncertainty about the impact of income inequality on health and mortality. Some studies have supported the original hypothesis about adverse effects, while others have shown no effects. One problem in these investigations is that there are many factors that may affect both income inequality and individual mortality but that cannot be adequately controlled for. The longitudinal Norwegian register data available for this study allowed municipality dummies to be included in the models to pick up time-invariant unobserved factors at that level. The results were compared with those from similar models without such dummies. The focus was on mortality in men and women aged 30-79 in the years 1980-2002, and the data included about 500000 deaths within 50 million person-years of exposure. While the models without municipality dummies suggested that income inequality in the municipality of residence, as measured by the Gini coefficient, had an adverse effect on mortality net of individual income, the results from the models that included such dummies were more mixed. Adverse effects appeared among the youngest, while among older men, there even seemed to be beneficial effects. In addition to illustrating the potential importance of controlling for unobserved factors by adding community dummies (doing a ‘fixed-effects analysis’ according to common terminology in econometrics), the findings should add to the scepticism about the existence of harmful health effects of income inequality, at least in the Nordic context.