In this study we extend the literature (e.g. Deaton, 2002a; Kennedy and Kawachi, 1996; Wilkinson, 1996) by proposing a new mechanism through which income inequality can influence health.
We argue that increased income inequality induces household crowding, which in turn leads to increased rates of infectious diseases. We use data from New Zealand that links hospital discharge rates with community-level characteristics to explore this hypothesis.
Our results provide support for a differential effect of income inequality and housing crowding on rates of hospital admissions for infectious diseases among children. Importantly, we find that genetic and non-communicable diseases do not show these joint crowding and inequality effects.
The effect of housing on communicable diseases provides a biological foundation for an income inequality gradient.