The Rich Live Longer: A Model of Income and Health Inequalities

Pablo Garcia-Sanchez and Olivier Pierrard
Additional contact information
Pablo Garcia-Sanchez: Banque centrale du Luxembourg, Departement Economie et Recherche
Authors registered in the RePEc Author Service: Pablo Garcia Sanchez

No 2025016, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Income and life expectancy are strongly correlated, yet the mechanisms underlying this relationship remain debated. This paper develops a structural model in which both variables are endogenous and jointly determined. Calibrated to U.S. data, the model replicates the income-longevity gradient and the distribution of age at death. It highlights the importance of both the health-to-income and income-to-health channels in accounting for these empirical patterns. Our model also offers a more cautious assessment of income redistribution policies than empirical studies, showing that redistribution can weaken incentives for preventive care and increase mortality risk. By contrast, lowering the price of preventive care through subsidies promotes better health and longer lives.

Keywords: Health; Income; Inequality; Redistribution; Subsidy (search for similar items in EconPapers)
JEL-codes: C60 D15 H24 H51 I12 I14 (search for similar items in EconPapers)
Date: 2025-10-22
New Economics Papers: this item is included in nep-age and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://sites.uclouvain.be/econ/DP/IRES/2025016.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2025016

Access Statistics for this paper

More papers in LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Virginie LEBLANC ().