A theory of medicine effectiveness, differential mortality, income inequality and growth for pre-industrial England

David de la Croix and Alessandro Sommacal

No 2006045, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We study how mortality reductins and income growth interact, looking at their relationship prior to the Industrial Revolution, when income per capita was stagnant. We first present a model of individual medical spending giving a rationale for individual health expenditures even when medicine was not effective in postponing death. We then explain the rise of effective medicine by a learning process function of expenditures in health. The rise in effective medicine can then be linked to the take-off of the eighteenth century through life expectancy increases, and fostered capital accumulation. The rise of effective medicine has also an impact on the relation between growth and inequality and on the intergenerational persistence of differences in income. These channels are operative through differential mortality induced by medicine effectiveness that turns out to determines a differential in the propensity to save among income groups.

Keywords: differential mortality; life expectancy; propensity to save; health expenditures. (search for similar items in EconPapers)
JEL-codes: D91 E13 I12 J10 N33 (search for similar items in EconPapers)
Date: 2006-05
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: A Theory of Medecine Effectiveness, Differential Mortality, Income Inequality and Growth for Pre-Industrial England (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2006045

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