Working Paper: CEPR ID: DP14507
Authors: Katharina Janke; Kevin Lee; Carol Propper; Kalvinder K. Shields; Michael Shields
Abstract: We estimate a model that allows for dynamic and interdependent responses of morbidity in different local areas to economic conditions at the local and national level, with statistical selection of optimal local area. We apply this approach to quarterly British data on chronic health conditions for those of working age over the period 2002-2016. We find strong and robust counter-cyclical relationships for overall chronic health, and for five broad types of health conditions. Chronic health conditions therefore increase in poor economic times. There is considerable spatial heterogeneity across local areas, with the counter-cyclical relationship being strongest in poorer local areas with more traditional industrial structures. We find that feedback effects are quantitatively important across local areas, and dynamic effects that differ by health condition. Consequently, the standard panel data model commonly used in the literature considerably under-estimates the extent of the counter-cyclical relationship in our context.
Keywords: macroeconomic conditions; health; morbidity; dynamics; heterogeneity; aggregation
JEL Codes: J10; J21; C33; E32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Local employment growth (J69) | Chronic health conditions (I12) |
| Economic conditions worsen (N14) | Prevalence of chronic health conditions (I12) |
| National levels of chronic illness (I12) | Local responses to economic changes (R11) |
| Economic conditions (E66) | Chronic health conditions (I12) |
| Employment growth (J23) | Chronic health conditions in poorer local areas (I14) |
| Economic conditions (E66) | Health response in areas with older populations (J14) |
| Economic conditions (E66) | Health response in areas with higher proportions of blue-collar employment (J29) |