Income Inequality and Later Life Health: Estimating Life Course Treatment Effects
Discussant: Irina Grafova
The model builds on theory and empirical evidence that suggests that inequality experienced in critical parts of life might matter. The model’s predictions rest on these temporal effects. The empirical implementation of this approach demands much data. I develop the required data. I use Panel Study of Income Dynamics (PSID) data. The PSID is a longitudinal survey that follows individuals for up to 49 years. I construct and map to individual PSID respondents measures of income inequality experienced every year over each person's whole lifetime. I measure state income inequality using the Gini coefficient. I estimate the Gini coefficient for each state in each year using observed state-year Ginis in the decennial Census years 1940 and later and from the CPS from 1976-2008. I then backcast to 1929 each state Gini coefficient using Bureau of Economic Analysis data on employment and earnings by industry. I also control for state-specific spending on factors that plausibly affect health – hospitals, welfare, etc. I examine the correlation between outcomes and lifetime exposure to inequality and to inequality experienced during theoretically critical periods. Finally, I examine the extent to which income inequality proxies for systematic cross‑state differences in other determinants of health. Early life income inequality matters – but not always in the way a casual observer might guess.