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Health, Wealth, and the Role of Institutions

A positive relationship between socioeconomic status and health has been observed over many populations and many time periods. One of the factors mediating this relation is the institutional environment in which people function. We consider longitudinal data from two countries with very different institutional environments, the United States and The Netherlands. To structure the empirical analysis, we develop a theoretical model relating changes in health status to income and changes in income to health status. We show that income or wealth inequality is closely connected with health inequality. We empirically estimate counterparts to the theoretical relationships with generally corroborative results.