THE TIME-VARYING RELATIONSHIP BETWEEN MORTALITY AND BUSINESS CYCLES IN THE USA

We examine the relationship between total mortality, deaths due to motor vehicle accidents, cardiovascular disease and measures of business cycles for the USA, using a time-varying parameter model for the periods 1961-2010. We first present a theoretical model to outline the transmission mechanism from business cycles to health status, to motivate our empirical framework and to explain why the relationship between mortality and the economy may have changed over time. We find overwhelming evidence of structural breaks in the relationship between mortality and business cycles over the sample period. Overall, the relationship between total mortality, cardiovascular mortality and the economy has become less procyclical over time and even countercyclical in recent times for certain age groups. Deaths due to motor vehicle accidents have remained strongly procyclical. Using drugs and medical patent data and data on hours worked, we argue that important advances in medical technology and changes in the effects that working hours have on health are important reasons for this time-varying relationship. Copyright (C) 2015 John Wiley & Sons, Ltd.