Life during Growth

William Easterly

Journal of Economic Growth, 1999, vol. 4, issue 3, 239-76

Abstract: A remarkable diversity of indicators shows quality of life across nations to be positively associated with per capita income. At the same time, the changes in quality of life as income grows are surprisingly uneven. Either in levels or changes, moreover, the effect of exogenous shifts over time is surprisingly strong compared to growth effects. This article reaches this conclusion with a panel dataset of 81 indicators covering up to four time periods (1960, 1970, 1980, and 1990). The indicators cover seven subjects: (1) individual rights and democracy, (2) political instability and war, (3) education, (4) health, (5) transport and communications, (6) inequality across class and gender, and (7) "bads." With a SUR estimator in levels, income per capita has an impact on the quality of life that is significant, positive, and more important than exogenous shifts for 32 out of 81 indicators. With a fixed-effects estimator, growth has an impact on the quality of life that is significant, positive, and more important than exogenous shifts for 10 out of 81 indicators. With a first-differences IV estimator, growth has a causal impact on the quality of life that is significant, positive, and more important than exogenous shifts for six out of 69 quality of life indicators. The conclusion speculates about such explanations for the pattern of results as (1) the long and variable lags that may come between growth and changes in the quality of life and (2) the possibility that global socioeconomic progress is more important that home-country growth for many quality-of-life indicators. Copyright 1999 by Kluwer Academic Publishers

Date: 1999
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