Can public spending reduce mortality disparities? Findings from East Germany after reunification
The Journal of the Economics of Ageing, 7–13 (2015)
Following the reunification of Germany, eastern Germans experienced large increases in life expectancy. The introduction of the West German welfare system was accompanied by mortality reductions, particularly for older East Germans. We use this natural experiment to investigate to what extent increased public social security transfers contributed to the rise in life expectancy. We find that every euro invested in East German pensions and health care yielded on average three hours of additional life expectancy. The rise in public spending was particularly beneficial for older age groups. Investments in health care were more beneficial for reducing all-cause mortality in the East. Still, investments in pensions were important for closing the life expectancy gap to West Germany. Our results suggest that public policy measures geared toward equalizing living standards can also help to narrow mortality differentials.
Keywords: Germany, life expectancy, public expenditures