The absolute health income hypothesis revisited: A Semiparametric Quantile Regression Approach∗

This paper uses the 1998-99 Canadian National Population Health Survey (NPHS) data to examine the health-income relationship that underlies the absolute income hypothesis. To allow for nonlinearity and data heterogeneity, we use a partially linear semiparametric quantile regression model. Among more than dozen of socioeconomic variables, we find that family income, age and the food security status are the most important factors in explaining an individual’s overall functional health. The “absolute income hypothesis” is partially true; the negative aging effects appear more pronounced for the ill-healthy population than for the healthy population and when annual income is below 40,000 Canadian dollars. JEL Classification: C14, C51, I12 ∗Email:[email protected] and [email protected]. The views expressed in this article are those of the authors and do not necessarily reflect the views of Statistics Canada. Both authors acknowledge financial support from the SSHRC of Canada.