Does income-related health inequality change as the population ages? Evidence from Swedish panel data.

This paper explains and empirically assesses the channels through which population aging may impact on income-related health inequality. Long panel data of Swedish individuals is used to estimate the observed trend in income-related health inequality, measured by the concentration index (CI). A decomposition procedure based on a fixed effects model is used to clarify the channels by which population aging affects health inequality. Based on current income rankings, we find that conventional unstandardized and age-gender-standardized CIs increase over time. This trend in CIs is, however, found to remain stable when people are instead ranked according to lifetime (mean) income. Decomposition analyses show that two channels are responsible for the upward trend in unstandardized CIs - retired people dropped in relative income ranking and the coefficient of variation of health increases as the population ages. (c) 2009 John Wiley & Sons, Ltd.