Money or Medicine? The Contribution of Rising Income and Improving Health Care to the East-West German Mortality Convergence

Tobias C. Vogt, Max Planck Institute for Demographic Research
Jutta Gampe, Max Planck Institute for Demographic Research

Improving health care and increasing income have strong benefits for human survival to and at older ages but their relative importance is less clear. German reunification demonstrates that the adoption of the modern western health and pension system lead to a decline in old age mortality among East Germans and to a convergence of life expectancy between both parts of the country. By using the reunification of Germany as a natural experiment, this study seeks to address the question if one of the two, wealth or health care, is more important. Our analysis uses individual level register data from the German statutory retirement fund which covers over 90% of East German pensioners. We apply hazard regression models to estimate the relative importance of availabilty of health care and increasing pension levels for the East German mortality catch up.