DP4542 Health Care Quality and Economic Inequality

Author(s): Tullio Jappelli , Luigi Pistaferri , Guglielmo Weber

Publication Date: August 2004

Keyword(s): Income inequality , precautionary saving , health care

JEL(s): D31 , D91

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP4542.asp

We argue that health care quality has an important impact on economic inequality and on saving behaviour. We exploit district-wide variability in health care quality provided by the Italian universal public health system to identify the effect of quality on income inequality, health inequality and precautionary saving. We find that in lower quality districts there is greater income and health dispersion and higher precautionary saving. The analysis carries important insights for the ongoing debate about the validity of the life-cycle model and interesting policy implications for the design of health care systems.