Does Income Inequality Harm Health? New Cross-National Evidence

Abstract

The provocative hypothesis that income inequality harms population health has sparked a large body of research, some of which has reported strong associations between income inequality and population health. Cross-national evidence is frequently cited in support of this important hypothesis, but the hypothesis remains controversial, and the cross-national work has been criticized for several methodological shortcomings. This study replicates previous work using a larger sample (692 observations from 115 countries over the 1947-1996 period), a wider range of statistical controls, and fixed-effects models that address heterogeneity bias. The relationship between health and inequality shrinks when controls are included. In fixed-effects models that capture unmeasured heterogeneity, the association between income inequality and health disappears. The null findings hold for two measures of income inequality: the Gini coefficient and the share of income received by the poorest quintile of the population. Analysis of a sample of wealthy countries also fails to support the hypothesis.