The causal effect of income on health: Investigating a policy reform in Austria

Mario Schnalzenberger
Johannes Kepler University, Austria

Do high income earners really live longer than mean income earners? Using data from the Austrian social security records from 1972-2009, I investigate on the effect of income on seven-year mortality rates of retirement candidates. Disability retirees, who retired after the abolition of a special type of early retirement, but who would have fulfilled its (much stronger) requirements are compared to the early retirees of this special type before its abolition. Under the early retirement regime they got up to 25 % more gross income than after its abolition. The average reduction of gross income in the data was 15 %. Preliminary results show, that this reduction in income decreased the seven-year survival probability of retirees by about 4-5 percentage points from 92 to 88 percent. This is an increase of about 50 percent in mortality, and the results are in line with some of the literature. In addition, the rich data on income path and health history coming from the administrative sets, allows several sensitivity checks and matching.

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