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A Theory of Medecine Effectiveness, Differential Mortality, Income Inequality and Growth for Pre-Industrial England

David de la Croix () and Alessandro Sommacal ()

No 2006025, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: We study how mortality reductions 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 medecine was not effective in postponing death. We then explain the rise of effective medecine 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 medecine 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 medecine 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: J10 I12 D91 E13 N33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea
Date: 2006-05-01
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Working Paper: A theory of medicine effectiveness, differential mortality, income inequality and growth for pre-industrial England (2006) Downloads
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