Advertisement

Journal of Population Economics

, Volume 32, Issue 2, pp 621–664 | Cite as

Premature mortality and poverty measurement in an OLG economy

  • Mathieu Lefèbvre
  • Pierre Pestieau
  • Gregory PonthiereEmail author
Original Paper

Abstract

Following Kanbur and Mukherjee (Bull Econ Res 59(4):339–359 2007), a solution to the “missing poor” problem (i.e., selection bias in poverty measures due to income-differentiated mortality) consists in computing hypothetical poverty rates while assigning a fictitious income to the prematurely dead. However, in a dynamic general equilibrium economy, doing “as if” the prematurely dead were still alive is likely to affect wages, output and capital accumulation, with an uncertain effect on poverty. We develop a three-period OLG model with income-differentiated mortality and compare actual poverty rates with hypothetical poverty rates that would have prevailed if everyone faced the survival conditions of the top income class. Including the prematurely dead has an ambiguous impact on poverty, since it affects income distribution through capital dilution, composition effects, and horizon effects. Our results are illustrated by quantifying the impact of income-differentiated mortality on poverty measures for France (1820–2010).

Keywords

Income-differentiated mortality Poverty measures Missing poor OLG models Capital accumulation 

JEL Classification

E13 E21 I32 

Notes

Acknowledgments

The authors would like to thank A. Cigno and two anonymous referees for their helpful suggestions and comments on this paper.

Compliance with Ethical Standards

Conflict of interests

The authors declare that they have no conflict of interest.

References

  1. Adhvaryu A, Beegle K (2012) The long-run impacts of adult deaths on older household members in Tanzania. Econ Develop Cultural Change 60(2):245–277CrossRefGoogle Scholar
  2. Ahammer A, Horvath T, Winter-Ebmer R (2015) The effect of income on mortality: new evidence for the absence of a causal link. IZA Discussion Paper 9176Google Scholar
  3. Ardington C, Bärnighausen T, Case A, Menendez A (2014) The economic consequences of AIDS mortality in South Africa. J Develop Econ 111:48–60CrossRefGoogle Scholar
  4. Azomahou T, Boucekkine R, Diene B (2009) A closer look at the relationship between life expectancy and economic growth. Int J Econ Theory 5(2):201–244CrossRefGoogle Scholar
  5. Backlund E, Sorlie P, Johnson N (1999) A comparison of the relationships of education and income with mortality: the national longitudinal mortality study. Soc Sci Med 49(10):1373–1384CrossRefGoogle Scholar
  6. Belloni M, Alessie R, Kalwij A, Marinacci C (2013) Lifetime income and old age mortality risk in Italy over two decades. Demograph Res 29(45):1261–1298CrossRefGoogle Scholar
  7. Blackburn K, Cipriani JP (2002) A model of longevity, fertility and growth. J Econ Dyn Control 26:187–204CrossRefGoogle Scholar
  8. Blanplain N (2016) L’espérance de vie par caté gorie sociale et par diplôme - méthodes et résultats. INSEE, document de travail F1602Google Scholar
  9. Boucekkine R, Laffargue JP (2010) On the distributional consequences of epidemics. J Econ Dyn Control 34(2):231–245CrossRefGoogle Scholar
  10. Boucekkine R, de la Croix D, Licandro O (2002) Vintage human capital, demographic trends and endogenous growth. J Econ Theory 104:340–375CrossRefGoogle Scholar
  11. Carter M, May J, Aguero J, Ravindranath S (2007) The economic impacts of premature adult mortality: panel data evidence from KwaZulu-Natal, South Africa. AIDS 21(7):S67–S73CrossRefGoogle Scholar
  12. Chakraborty S (2004) Endogenous lifetime and economic growth. J Econ Theory 116:119–137CrossRefGoogle Scholar
  13. Cogneau D, Grimm M (2008) The impact of AIDS mortality on the distribution of income in Côte d’Ivoire. J African Econ 17(5):688–728CrossRefGoogle Scholar
  14. de la Croix D, Licandro O (1999) Life expectancy and endogenous growth. Econ Lett 65(2):255–263CrossRefGoogle Scholar
  15. de la Croix D, Licandro O (2013) The child is father of the man: implications for the demographic transition. Econ J 123(567):236–261CrossRefGoogle Scholar
  16. Deaton A (2003) Health, inequality and economic development. J Econ Lit 41:113–158CrossRefGoogle Scholar
  17. Deaton A, Paxson C (1998) Aging and inequality in income and health. Amer Econ Rev 88(2):248–253Google Scholar
  18. Duleep HO (1986) Measuring the effect of income on adult mortality using longitudinal administrative record data. J Human Resour 21(2):238–251CrossRefGoogle Scholar
  19. Evans W N, Moore T J (2011) The short-term mortality consequences of income receipt. J Publ Econ 95(11-12):1410–1424CrossRefGoogle Scholar
  20. Faruqee H (2003) Debt, deficits, and age-specific mortality. Rev Econ Dyn 6 (2):300–312CrossRefGoogle Scholar
  21. Human Mortality Database (2016) University of California, Berkeley (USA), and Max Planck Institute for Demographic Research (Germany). Available at www.mortality.org (data downloaded on January 2016)
  22. Kanbur R, Mukherjee D (2007) Premature mortality and poverty measurement. Bull Econ Res 59(4):339–359CrossRefGoogle Scholar
  23. Kesztenbaum L, Rosenthal JL (2012) The democratization of longevity: how the poor became old in Paris, 1870-1940, INEDGoogle Scholar
  24. Lefebvre M, Pestieau P, Ponthiere G (2013) Measuring poverty without the mortality paradox. Soc Choice Welfare 40(1):285–316CrossRefGoogle Scholar
  25. Lefebvre M, Pestieau P, Ponthiere G (2017) FGT old-age poverty measures and the Mortality Paradox: theory and evidence. Rev Income Wealth, forthcomingGoogle Scholar
  26. Maddison Project (2013) http://www.ggdc.net/maddison/maddison-project/home.htm, 2013 version
  27. Malthus T (1798) An essay on the principle of population. LondonGoogle Scholar
  28. Ravallion M (2016) The economics of poverty. History, measurement and policy. Cambridge University PressGoogle Scholar
  29. Salm M (2007) The effect of pensions on longevity: evidence from Union Army veterans. IZA Discussion Paper 2668Google Scholar
  30. Sen AK (1998) Mortality as an indicator of economic success and failure. Econ J 108:1–25CrossRefGoogle Scholar
  31. Snyder S E, Evans W N (2006) The effect of income on mortality: evidence from the Social Security notch. Rev Econ Statist 88(3):482–495CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  • Mathieu Lefèbvre
    • 1
  • Pierre Pestieau
    • 2
    • 3
    • 4
  • Gregory Ponthiere
    • 5
    • 4
    • 6
    Email author
  1. 1.BETAUniversity of StrasbourgStrasbourgFrance
  2. 2.University of LiegeLiegeBelgium
  3. 3.CORELouvain-la-NeuveBelgium
  4. 4.Paris School of EconomicsParisFrance
  5. 5.University Paris East (ERUDITE)ParisFrance
  6. 6.Institut universitaire de FranceParisFrance

Personalised recommendations