What lies behind the education gradient in health?

Despite a large number of studies, the evidence on the causal effect of education on health remains inconclusive. Among other things, it might be related to the fact that the impact of education on health in most cases is evaluated at the mean whereas little is known about what happens in other parts of the distribution. Using data from the Survey of Health, Ageing and Retirement in Europe, this paper aims to analyze the education gradient in health and its underlying factors from a distributional perspective. We account for the endogeneity of individual education by exploiting the cross-country cross-time variation in the number of compulsory schooling years induced by policy changes. Our findings show that higher educated individuals indeed enjoy better health than those who are lower educated. The gradient, however, is not constant along the health distribution, with the gap being three times bigger at the top of the distribution than at its bottom. The results further suggest that most of the gradient can be explained by the sub-group differences in individual characteristics, especially those related to employment patterns, health behaviors, and parental background.