TY  - JOUR
A1  - Kalwij, Adriaan
T1  - An empirical analysis of the importance of controlling for unobserved heterogeneity when estimating the income-mortality gradient
Y1  - 2014/10/17
JF  - Demographic Research
JO  - Demographic Research
SN  - 1435-9871
SP  - 913
EP  - 940
DO  - 10.4054/DemRes.2014.31.30
VL  - 31
IS  - 30
UR  - https://www.demographic-research.org/volumes/vol31/30/
L1  - https://www.demographic-research.org/volumes/vol31/30/31-30.pdf
L2  - https://www.demographic-research.org/volumes/vol31/30/31-30.pdf
N2  - Background: Statistical theory predicts that failing to control for unobserved heterogeneity in a Gompertz mortality risk model attenuates the estimated income-mortality gradient toward zero. 

Objective: I assess the empirical importance of controlling for unobserved heterogeneity in a Gompertz mortality risk model when estimating the income-mortality gradient. The analysis is carried out using individual-level administrative data from the Netherlands over the period 1996-2012. 

Methods: I estimate a Gompertz mortality risk model in which unobserved heterogeneity has a gamma distribution and left-truncation of life durations is explicitly taken into account. 

Results: I find that, despite a strong and significant presence of unobserved heterogeneity in both the male and female samples, failure to control for unobserved heterogeneity yields only a small and insignificant attenuation bias in the negative income-mortality gradient. 

Conclusions: The main finding, a small and insignificant attenuation bias in the negative income-mortality gradient when failing to control for unobserved heterogeneity, is positive news for the many empirical studies, whose estimations of the income-mortality gradient ignore unobserved heterogeneity. 

ER  -