Economic conditions and health: local effects, national effect and local area heterogeneity

Abstract

We study the relationship between health and changing economic conditions in local areas using a GVAR model that allows for dynamic and interdependent responses to local and national economic conditions. We examine quarterly British data for 2002–2016 for 131 local areas, which displays considerable heterogeneity in economic conditions. We find robust evidence that health improves as the local economy (employment) expands, but that it takes over 2 years to realise the full effect. This relationship holds for musculoskeletal, cardiovascular, respiratory, and mental health conditions. We find considerable response heterogeneity at the local area level with the strongest relationship between changes in economic conditions and health found for areas with more traditional industrial structures.