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Income Inequality and Mental Health

Grace Lordan (), D.S. Prasada Rao and Lucy Bechtel

No 456, Discussion Papers Series from University of Queensland, School of Economics

Abstract: The causal association between absolute income and health is well established, however the relationship between income inequality and health is not. The conclusions from the received studies vary across the region or country studied and/or the methodology employed. Using the Household, Income and Labour Dynamics in Australia panel survey, this paper investigates the relationship between mental health and inequality in Australia. A variety of income inequality indices are calculated to test both the Income Inequality and Relative Deprivation Hypothesis. We find that mental health is only adversely affected by the presence of relative deprivation to a very small degree. In addition we do not find support for the Income Inequality Hypothesis. Importantly our results are robust to a number of sensitivity analyses.

Date: 2012
New Economics Papers: this item is included in nep-hea and nep-ltv
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