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Health: an important source of income inequality between countries

28 September 2018

Wellbeing entails more than just material welfare. A broader perspective on economic growth makes it possible to take aspects such as inequality and health into account. This is important for several reasons, for example because of the fact that wellbeing levels in Europe improved significantly faster than income levels in the first half of the twentieth century. These improvements in wellbeing were mainly the result of increased life expectancy, a decrease in inequality and shorter working hours, Daniel Gallardo Albarrán concludes in his PhD thesis.

Poor health is directly related to income as it affects the potential workforce. Until 1950, increasing inequality in health – rich countries being the first to become healthier – was a major cause of increasing income inequality. Although increasing life expectancy in poorer countries lessened the severity of this effect after 1950, if health improvement stagnates due to an epidemic or poor public health policy, this can lead to a new increase in income inequality.

International epidemiological transition

In the period before the major decrease in mortality rates (around 1900), the variation in health levels accounted for nearly 20 percent of all income inequality, Gallardo Albarrán concludes. In the course of the first half of the twentieth century, this increased to 26 percent as health levels rose thanks to new medical knowledge – but only in a small group of countries. During the international epidemiological transition that took place from the mid-twentieth century until 1990, the role of health as a source of global income inequality decreased from 26 to 12 percent. During this period, great worldwide progress in workers’ health contributed to significant improvements in productivity in countries that had previously lagged behind.

The rate of improvement is slowing down

Since 1990, the effect of health on income levels has remained fairly stable. Health differences are not decreasing as quickly as they used to, Gallardo Albarrán concludes. The rate of improvement in developing countries is slowing down, as these countries are seeing an increase in chronic cardiovascular and pulmonary diseases – diseases that are much more difficult to fight than infectious diseases.

A renewed increase in global health differences

In recent decades, we seem to be on the verge of a renewed increase in global health differences, as some indicators such as life expectancy have progressed less strongly in some countries. Although this divergence and its causes are not discussed in Gallardo Albarrán’s thesis, he does demonstrate that preventing a new period of divergence would immensely benefit public health, which would in turn result in an increase in productivity and thus welfare. This topic should therefore be high on the agenda of policymakers worldwide, the PhD candidate states.

Directly relevant to developing countries

Gallardo Albarrán shows that his results are directly relevant to developing countries which face problems caused by a lack of sanitary facilities. He claims that a similar situation also occurred in Germany in the late nineteenth century, and the ensuing installation of water pipelines (in the late 19th to early 20th century) had only limited effects on public health. It was not until a modern sewerage system was also introduced that a drastic reduction in morbidity and mortality rates took place. According to Gallardo Albarrán, these two developments together account for at least 19 percent of the decrease in mortality. Developing countries are still struggling with public health, with India showing a prime example of a poor sanitary infrastructure. The results of this study demonstrate how important it is to invest in both clean drinking water and sewerage systems.

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Last modified:31 January 2023 11.15 a.m.
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