CCHE Seminar Series: Health consequences of shocks to absolute and relative income

Maripier Isabelle

l’Université Laval

Friday February 19th, 2020, 10am-12pm, Zoom

Abstract: The feeling of falling behind has been identified in recent research as a potential factor behind the rise in morbidity and mortality among certain population groups in developed economies, such as the U.S. and Canada. Improving our understanding of such dynamics is important, but identifying the health effects of changes to people’s relative economic situation separately from the health impact of changes to their absolute level of income is not straightforward. First, both absolute and relative income are likely endogenous inputs in the health production function. Second, changes to individuals’ absolute income levels often simultaneously affect their position within the income distribution. To address these challenges, this paper proposes an empirical strategy that draws on the importance and geographic concentration of the extractive industry in Canada. To deal with the potential reverse causality characterizing the relationship between health and income, we exploit exogenous movements in the price of oil, which predominantly affect the earnings of workers in the extractive industry. Oil price variations further induce different combinations of changes to absolute and relative income across individuals, based on their own labour market activity and on the share of their neighbours employed in the extractive industry. Using hospitalization records linked to census data, we capitalize on these combinations to investigate the extent to which people’s absolute and relative income trajectories separately contribute to the development of severe health conditions and to the utilization of inpatient care. Our results shed new light on mechanisms through which income inequality might affect people’s well-being.

Maripier Isabelle is an assistant professor at the department of Economics at l’Université Laval (Québec, Canada), a researcher at the CERVO brain research centre, and chairholder of the Sentinel North Partnership Research Chair in Economics and Brain Health. Her current research addresses issues at the intersection of economic inequality, health economics and labour economics, with a focus on questions related to brain health and mental health. She is an associate member at the Centre de recherche sur les risques, les enjeux économiques et les politiques publiques and a faculty associate at the Canadian Center for Health Economics. She completed a PhD in Economics at the University of Toronto (Ontario, Canada) and a postdoctoral fellowship at the James M. and Cathleen D. Stone Centre for the Study of Wealth Inequality, at INSEAD (France).