Does public spending level mortality inequalities? – Findings from East Germany after unification Fanny Kluge and Tobias Vogt Max Planck Institute for Demographic Research, Rostock, Germany and University of Rostock, Germany
NTA Global Meeting 03.06.2013
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Public spending and mortality
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Background
Motivation
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In the literature: social inequalities are a major cause for mortality differentials.
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The larger socioeconomic inequality the wider life expectancy differentials.
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Mortality differentials should narrow if social inequalities diminish among or within countries.
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Public spending and mortality
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Background
Motivation
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In the literature: social inequalities are a major cause for mortality differentials.
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The larger socioeconomic inequality the wider life expectancy differentials.
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Mortality differentials should narrow if social inequalities diminish among or within countries.
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Can public policy contribute to a leveling of mortality differentials?
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Public spending and mortality
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Background
The German reunification - a natural experiment
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Fall of Berlin Wall →
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Public spending and mortality
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Background
The German reunification - a natural experiment
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Fall of Berlin Wall → Reunification after 40 years of separation and antagonistic political, social and economic ’treatments’ for a population sharing the same cultural and historic background.
Kluge and Vogt
Public spending and mortality
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Background
The German reunification - a natural experiment
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Fall of Berlin Wall → Reunification after 40 years of separation and antagonistic political, social and economic ’treatments’ for a population sharing the same cultural and historic background. What did the reunification mean for the East?
Kluge and Vogt
Public spending and mortality
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Background
The German reunification - a natural experiment
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Fall of Berlin Wall → Reunification after 40 years of separation and antagonistic political, social and economic ’treatments’ for a population sharing the same cultural and historic background. What did the reunification mean for the East? I
Introduction of the West German social security system including access to modern health care.
Kluge and Vogt
Public spending and mortality
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Background
The German reunification - a natural experiment
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Fall of Berlin Wall → Reunification after 40 years of separation and antagonistic political, social and economic ’treatments’ for a population sharing the same cultural and historic background. What did the reunification mean for the East? I
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Introduction of the West German social security system including access to modern health care. Increase in relative and nominal income due to introduction of West German Mark at a highly beneficial exchange rate of 1:1.
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Public spending and mortality
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Background
Life expectancy and unification West Germany
Females
Males 79
unification
78 77 76 75 74 73 72 71 70 69 68 67 66 65
71
72
73
74
75
76
77
78
79
80
81
82
unification
83
84
seq(1, 10)
70
Life Expectancy at Birth
East Germany
1956
1969
1982
1995
2008
1956
1969
1982
1995
2008
Years
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Public spending and mortality
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Background
Mortality improvements by age group
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Public spending and mortality
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Background
Research Question
Which impact did public spending have on the mortality convergence and how elastic is mortality to public spending? I
variety of factors changed after unification (pollution, life style factors etc.)
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but limitation on public expenditures for pensions and health care (Diehl 2004)
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Public spending and mortality
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Data and Methods
Data and Methodology Data I National Transfer Accounts for East and West Germany. I
Causes of Death Statistics Germany.
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Public spending and mortality
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Data and Methods
Data and Methodology Data I National Transfer Accounts for East and West Germany. I
Causes of Death Statistics Germany.
Modeling the impact of public spending on mortality I
Difference-in-difference estimation to estimate the elasticity of mortality to public spending
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Generalized linear model with Poisson-distributed mortality hazard to quantify the impact of different categories of public spending
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Results
Life expectancy and public pensions
400
600
800
Average West Average East
200
per capita in Euro
1000
Average Monthly Pension East vs West
1975
1985
1995
2005
Calendar Years
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Public spending and mortality
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Results
Life expectancy and health expenditures
70
1000
72
74 Life Expectancy at birth
2500 2000 1500
Health Expenditures East Health Expenditures West Life Expectancy East Life Expectancy West
500
per capita in Euro
76
3000
Unification
78
3500
Life Expectancy vs. Health Expenditures
1980
1985
1990
1995
2000
Calendar Years
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Results
East/West expenditure ratios Both Sexes 1:1 Both Sexes 5:1
Females Males
Average Pensions
Health Expenditures Per Capita 10 8 4
6
10
2
5 0
West/East Ratios
15
seq(1, 10)
1980 1984 1988 1992 1996 2000
1980 1984 1988 1992 1996 2000
Calendar Years
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Results
A simple diff-in-diff approach Without Unification
seq(1, 10)
unification
3700 1900
2800
per capita in Euros
4600
5500
unification
80 79 78 77 76 75 74 73 72
1000
71 70
Years at Birth
Total Social Expenditures 6400
Life Expectancy
Unification
1980
1986
1992
1998
1980
Kluge and Vogt
1986
1992
1998
Public spending and mortality
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Results
A simple diff-in-diff approach Without Unification
unification
3700
per capita in Euros
72
1900
2800
77 76 75 74 73
4600
5500
unification
80
Total Social Expenditures
1000
71 70
Years at Birth
78
79
Red: real observed values
seq(1, 10)
6400
Life Expectancy
Unification
1980
1986
1992
1998
1980
1986
1992
1998
Results
A simple diff-in-diff approach Without Unification
unification
3700
per capita in Euros
72
1900
2800
77 76 75 74 73
4600
5500
unification
80
Total Social Expenditures
1000
71 70
Lee-Carter-Forecast
Years at Birth
78
79
Red: real observed values
seq(1, 10)
6400
Life Expectancy
Unification
1980
1986
1992
1998
Kluge and Vogt
1980
1986
1992
1998
Public spending and mortality
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Results
A simple diff-in-diff approach
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∆ life expectancy: 1.8 years
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∆ public spending: 4,500 e
1 e invested in pensions or health care yields 3 hours life expectancy per year.
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Results
A simple diff-in-diff approach
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∆ life expectancy: 1.8 years
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∆ public spending: 4,500 e
1 e invested in pensions or health care yields 3 hours life expectancy per year.
Other factors changed: pollution, nutrition, health behaviour, life style factors, etc. → GLM for different causes of death.
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Results
The regression model
log(mxj,t ) = αj,t + β Xj,t + εj,t
(Intercept) Pensions Health Age Sex
Estimate
Std. Error
t value
Pr(>|t|)
-9.960e+00 -2.698e-02 -3.728e-02 1.018e-01 -3.419e-01
9.853e-02 5.222e-06 8.088e-06 1.263e-03 2.555e-02
-101.086 -5.166 -4.610 80.579 -13.379
< 2e-16 *** 2.51e-07 *** 4.16e-06 *** < 2e-16 *** < 2e-16 ***
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Results
All-cause mortality All Cause Mortality
All cause mortality
(Intercept) Pensions Health Age Region Sex Unific
Ages above 60 Germany Estimate Std. Error -1,07E-001 4,23E-002 -5,46E-006 1,17E-006 -3,50E-005 2,94E-006 1,09E-001 4,98E-004 -1,06E-001 6,40E-003 -3,47E-001 5,85E-003 -1,08E-001 9,40E-003
P-value <2E-016 3,26E-006 <2E-016 <2E-016 <2E-016 <2E-016 <2E-016
Ages above 60 East Germany Estimate Std. Error P-value -1,05E-001 5,07E-002 <2E-016 -1,90E-005 1,76E-006 <2E-016 -4,95E-005 4,80E-006 <2E-016 1,08E-001 6,09E-004 <2E-016 -3,10E-001 7,02E-003 <2E-016 -3,58E-003 1,94E-002 0,854
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Ages above 60 West Germany Estimate Std. Error P-value -1,11E-001 8,22E-002 <2E-016 3,89E-006 1,77E-006 0,02844 -1,81E-005 6,70E-006 0,00692 1,11E-001 1,12E+000 <2E-016 -3,67E-001 1,06E-002 <2E-016 -1,47E-001 1,19E-002 <2E-016
Results
All-cause mortality All Cause Mortality
All cause mortality
(Intercept) Pensions Health Age Region Sex Unific
Ages above 60 Germany Estimate Std. Error -1,07E-001 4,23E-002 -5,46E-006 1,17E-006 -3,50E-005 2,94E-006 1,09E-001 4,98E-004 -1,06E-001 6,40E-003 -3,47E-001 5,85E-003 -1,08E-001 9,40E-003
P-value <2E-016 3,26E-006 <2E-016 <2E-016 <2E-016 <2E-016 <2E-016
Ages above 60 East Germany Estimate Std. Error P-value -1,05E-001 5,07E-002 <2E-016 -1,90E-005 1,76E-006 <2E-016 -4,95E-005 4,80E-006 <2E-016 1,08E-001 6,09E-004 <2E-016 -3,10E-001 7,02E-003 <2E-016 -3,58E-003 1,94E-002 0,854
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Ages above 60 West Germany Estimate Std. Error P-value -1,11E-001 8,22E-002 <2E-016 3,89E-006 1,77E-006 0,02844 -1,81E-005 6,70E-006 0,00692 1,11E-001 1,12E+000 <2E-016 -3,67E-001 1,06E-002 <2E-016 -1,47E-001 1,19E-002 <2E-016
Results
All-cause mortality All Cause Mortality
All cause mortality
(Intercept) Pensions Health Age Region Sex Unific
Ages above 60 Germany Estimate Std. Error -1,07E-001 4,23E-002 -5,46E-006 1,17E-006 -3,50E-005 2,94E-006 1,09E-001 4,98E-004 -1,06E-001 6,40E-003 -3,47E-001 5,85E-003 -1,08E-001 9,40E-003
P-value <2E-016 3,26E-006 <2E-016 <2E-016 <2E-016 <2E-016 <2E-016
Ages above 60 East Germany Estimate Std. Error P-value -1,05E-001 5,07E-002 <2E-016 -1,90E-005 1,76E-006 <2E-016 -4,95E-005 4,80E-006 <2E-016 1,08E-001 6,09E-004 <2E-016 -3,10E-001 7,02E-003 <2E-016 -3,58E-003 1,94E-002 0,854
Ages above 60 West Germany Estimate Std. Error P-value -1,11E-001 8,22E-002 <2E-016 3,89E-006 1,77E-006 0,02844 -1,81E-005 6,70E-006 0,00692 1,11E-001 1,12E+000 <2E-016 -3,67E-001 1,06E-002 <2E-016 -1,47E-001 1,19E-002 <2E-016
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Results
Health care or pensions? I
Overall: health care has a greater impact than pensions in reducing mortality but pensions are very important for the convergence of East and West Germany.
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Results
Health care or pensions? I
Overall: health care has a greater impact than pensions in reducing mortality but pensions are very important for the convergence of East and West Germany.
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Different CoD: health care expenditures most beneficial in reducing mortality from infectious diseases, followed by digestive and respiratory diseases. Pensions have greatest effect on mortality from external causes and circulatory diseases.
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Summary
Conclusion
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East Germans benefited greatly from increases in public spending.
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Mortality differentials narrowed as level of disposable income converged and access to modern health was granted.
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Indication that public spending can help to level mortality differentials via the reduction of social inequalities.
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Next Steps
Future Research
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Include lag variables.
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Focus on older age groups.
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Use the German Pension Fund data to investigate if the results hold on the individual level.
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Thank you for your attention!
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Comments and Questions are welcome.
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E-Mail:
[email protected]
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