A macroeconomic analysis of mortality in 24 EU states

Abstract

Improved economic conditions in the long term are associated with better health outcomes and higher life expectancies. However, various studies focusing on the short-term impacts of business cycle fluctuations tend to find a pro-cyclical relationship whereby mortality rates tend to decline during recessions and increase during periods of economic expansions. This study also replicates these findings using a panel data analysis of 24 European Union countries covering a 16-year period. In fact, unemployment rates; which were used as a proxy for short-term macroeconomic conditions, were found to be negatively and statistically significantly related to all-cause mortality rates. Such results were persistent across several model specifications and even when the unemployment rates were replaced with the deviations from trend. Further to this, a quadratic relationship between level of economic development and mortality rates was also found suggesting that the positive effects of development on health occur only after a certain level of development is reached. Results however need to be interpreted with caution as these findings may be well influenced by certain methodological limitations. This study can have several implications as it shows that periods of economic booms and higher levels of development do not necessary result in better health outcomes, thus emphasising the importance of undertaking necessary policy interventions to ensure health is not traded for higher income and wealth.