Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

In his seminal paper, Ruhm (QJE, 2000) analyzes the relationship between changes in the business cycle and changes in mortality in the U.S. Using state-level data for 1972 - 1991, he finds that upturns in state economic activity are associated with increases in overall mortality. Further, he finds that this relationship holds for the mortality rates for numerous specific causes of death.footnote{An exception is suicides, for which he finds a positive relationship between unemployment and the mortality rate.} The finding that mortality rates are countercyclical has been confirmed in studies of longer periods in the U.S. (Tapia Granados, 2005) and in studies of Germany (Neumayer, 2004) and of the member countries of the Organization for Economic Cooperation and Developement (Gerdtham and Ruhm, 2006).

The purpose of this paper is to examine the relationship between business cycles and mortality in Mexico. Mexico provides an excellent setting to explore this issue as it shares many important characteristics of developing countries at the middle and middle-high income level. First, Mexico's per capita income is in the middle of the range of income of these countries. Second, Mexico is undergoing a epidemiological transition common to many of these countries that is characterized by an increase in the prevalence of chronic diseases and a decrease of infectious diseases. Third, as a fraction of GDP, private and government health expenditures in Mexico are well within the range of observed values for these countries. Finally, the age distribution of its residents mirrors that of other countries at this stage of development.

A unique data set has been assembled to investigate this question. The resulting sample consists of state-level, annual data from 1993 through 2004. During this period, while the general trend in mortality was negative, significant year-to-year variation is observed. Furthermore, during the sample period Mexico experienced both an economic crisis and periods of strong growth. The data contain for each state the mortality rate (overall, by age group, and for several specific causes of death), measures of economic activity, and relevant control variables. While state-level data can be relatively easily obtained for many developed countries, they are typically not available for a developing country such as Mexico.

We find that the general result in Ruhm (2000) holds for Mexico during this time period. Namely, mortality rates appear to increase (decrease) during economic expansions (contractions). Further, changes in economic conditions appear to most effect those aged 20 - 49. However, interesting differences emerge in the analyses of specific causes of death. For instance, in contrast with Ruhm (2000), increases in income are associated with lower mortality rates for cancer and higher mortality rates for suicides. These results suggest that the relationship between changes in income and mortality may vary across developed and developing countries.