Income Inequality and Life expectancty: a panel data analysis on 13 OECD countries

Income inequality has been rising in the last two decades in most OECD countries, which might lead to various undesirable social and health consequences. Existing literature has examined the cross-sectional association between income inequality and life expectancy in the last century and significant negative relationship has found in most studies. Build on their approach, this study selected panel datasets from 13 OECD countries, investigate the association between income inequality and life expectancy in this century. All variables included shows time trend in some panels, therefore, the first difference of variables are taken to transform into stationary process. The relationship between them are interpreted as changes on changes. Both pooled cross-sectional and fixed effect regression reports strong evidence that short-run changes of income inequality does not significantly affect changes of life expectancy on average. Alternative specifications and measurements confirm the same result. However, the long-run relationship between inequality and life expectancy needs to be further investigated.