Dutta, Mousumi and Husain, Zakir and Chowdhary, Nidhi (2012): Is health wealth? Results of a panel data analysis.
Download (734kB) | Preview
The objective of this paper is to determine whether health (measured by life expectancy at birth) contributes to economic growth and the functional form in which it influences per capita income. This links our study to the debate between Neo-classical and endogenous growth theorists on whether investment in human capital can sustain growth indefinitely. Data on 216 countries for the period 1980-2009 has been obtained from World Development Indicators dataset. This enables us to focus on a period characterized by globalization and demographic changes manifested in the form of population graying. Our findings confirm the importance of investment in human capital. But, in contrast to conclusions of endogenous growth models, we find evidence that benefit from increasing longevity tapers off. We conclude by pointing out that it is necessary to extend this study further by incorporating other dimensions of health that are not captured by life expectancy.
|Item Type:||MPRA Paper|
|Original Title:||Is health wealth? Results of a panel data analysis|
|Keywords:||Life expectancy at birth; endogenous growth models; Neo-classical growth models; panel data; human capital|
|Subjects:||C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
I - Health, Education, and Welfare > I1 - Health > I10 - General
|Depositing User:||Zakir Husain|
|Date Deposited:||09. Jul 2012 12:19|
|Last Modified:||14. Feb 2013 09:35|
Acemoglu, D. and Johnson,S. (2007) Disease and Development: The Eﬀect of Life Expectancy on Economic Growth, Journal of Political Economy, 115(6), pp.925—85.
Aghion, P. and Howitt, P. (1998) Endogenous Growth Theory, Cambridge, MA: MIT Press.
Aguayo-Rico, Andrés and Guerra-Turrubiates, Iris A. and de Oca-Hernández Ricardo Montes Instituto (2005) Empirical Evidence of the Impact of Health on Economic Growth, Issues in Political Economy, 14 (August). Accessed at http://org.elon.edu/ipe/aguayorico%20final.pdf on 20 January 2012.
Anderson, T. and Hsiao, C. (1981) Estimation of Dynamic Models with Error components, Journal of the American Statistical Association, 76(375), pp. 598–606.
Arcand, J. L. (2001) Undernourishment and Economic Growth – The Efficiency Cost of Hunger, Paper presented in the European Media Seminar on Global Food Security held at the Royal Swedish Academy of Agriculture and Forestry, Stockholm, (15th October).
Arellano, M. and Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations, The Review of Economic Studies, 58, pp. 277 – 297.
Auerbach, A. J., Kotlikoff, L. J., Hagemann, R. P. and Nicoletti, G. (1989) The economic dynamics of an ageing population: the case of four OECD countries, OECD Department of Economics and Statistics Working Paper No. 62.
Azomahou, Théophile T. (2008) A closer look at the relationship between life expectancy and economic growth, Working Paper Series 027, United Nations University, Maastricht Economic and Social Research and Training Centre on Innovation and Technology, USA
Ball, R. & Bethell, T. (1998) Straight Talk about Social Security: An Analysis of the Issues in the Current Debate, A Century Foundation/Twentieth Century Fund Report, The Century Foundation Press, New York.
Barro, R.J. (1996) Three Models of Health and Economic Growth, Unpublished Manuscript, Harvard University, Cambridge, MA
Barro, R.J. (1997) Determinants of Economic Growth: A Cross-Country Empirical Study, Cambridge MA, MIT Press.
Barro, R. J. and Sala-i-Martin, X. (1995) Economic Growth, Mc Graw-Hill, New York.
Barro, R.J. and Sala-i-Martin, X. (2004) Economic Growth, MIT Press: Cambridge, MA.
Bergh, A. and Nilsson, T. (2010) Good for living? On the relationship between globalization and life expectancy, World Development, 38(9), pp. 1191-1203.
Bloom, D., Canning, D. and J. Sevilla (2004) The Eﬀect of Health in Economic Growth: A Production Function Approach, World Development, 32(1), pp. 1-13.
Breusch, T.S. and Pagan, A.R. (1979) Simple test for heteroscedasticity and random coefficient variation. Econometrica (The Econometric Society) 47(5), pp. 1287–1294.
Bruno, G.S.F. (2005) Approximating the bias of the LSDV estimator for dynamic unbalanced panel data models. Economics Letters, 87, pp. 361-366.
Cervellati, M. and Sunde, U. (2011) Disease and development: The role of life expectancy Reconsidered, Journal of Economic Growth, 16, pp. 99–133.
Cutler, D. M., Poterba, J., Sheiner, L.and Summers, L. (1990) An Aging Society: Opportunity or Challenge?, Brookings Papers on Economic Activity, pp. 1-56.
Dahan, M. and Tsiddon, D. (1998) Demographic Transition, Income Distribution, and Economic Growth, Journal of Economic Growth 3, 29-51.
Deaton, A., (2001) Health, Inequality, and Economic Development, Journal of Economic Literature, XLI, pp. 113–158.
Domar, E. D. (1946) Capital Expansion, Rate of Growth and Employment, Econometrica, 14, pp.137-147.
Evans, D., Head, M.J. and Speller, V. (1994) Assuring Quality in Health Promotion: How to Develop Standard of Good Practice, Health Education Authority, London, Routledge.
Faruqee, H. and Mühleisen, M. (1997) Population aging in Japan: demographic shock and ﬁscal Sustainability, International Monetary Fund, Washington, USA.
Fogel, R.W. (1994) Economic growth, population health and physiology: The bearing of Long term processes on the making of economic policy, American Economic Review, 84, 369-395.
Gallup, J. L. and Sachs, J. D. (2000) The economic burden of malaria, Working Paper, 52, Centre for International Development, Harvard University, Cambridge.
Gallego, Juan M. (2000) Aspectos Teóricos sobre la Salud como un Determinante del Crecimiento Económico. Borradores de Investigación de la Universidad del Rosario, 5.
Glewwe, P. and Jacoby, H. (1995) An Economic Analysis of Delayed Primary School Enrolment in a Low Income Country: The Role of Early Childhood Nutrition, The Review of Economics and Statistics, 77(1), pp. 156-16.
Glewwe, P., Jacoby, H. G. and King, E. M. (2001) Early Childhood Nutrition and Academic Achievement: a Longitudinal Analysis, Journal of Public Economics, 81, pp. 345-368.
Grossman, M. (1972) On the Concept of Health Capital and the Demand For Health, Journal of Political Economy, 80, pp. 223-55.
Gyimah-Brempong, K. and Wilson, M. (2004) Health Human Capital and Economic Growth in sub-Saharan Africa and OECD countries, The Quarterly Review of Economics and Finance, 44, Elsevier, pp. 296-320
Halter, W. A., and Hemming, R. (1987) The Impact of Demographic Change on Social Security Financing, IMF Staff Papers, 34(3), pp. 471-502.
Hansen, Casper Worm (2012) The relation between wealth and health: Evidence from a world-panel of countries, Economic Letters, 115, pp. 175-176.
Harrod, R.F. (1939) An Essay In Dynamic Theory, Economic Journal, 49, (193), March, pp. 14-33.
Hausman, J. A. (1978). Specification Tests in Econometrics. Econometrica, 46(6), pp. 1251–127.
Heller, P. S. (1989) Ageing, Savings and Pensions in the Group of Seven Countries, International Monetary Fund, Washington, DC.
Hazan, M. (2011) Life Expectancy and Schooling: New Insights from Cross-Country Data. Journal of Population Economics, (in press; early view 4 November).
Howitt, P. (2000) Endogenous growth and cross-country income differences, American Economic Review, 90, pp. 829–46.
Howitt, P. (2005) Health, Human Capital, and Economic Growth: A Schumpeterian Perspective. In G. López-Casasnovas, B. Rivera and L. Currais. (ed) Health and Economic Growth: Findings and Policy Implications, Cambridge, MA: MIT Press, pp.19-40.
Howitt, P. and Mayer-Foulkes, D. (2005) R&D, Implementation and Stagnation: A Schumpeterian Theory of Convergence Clubs, Journal of Money, Credit and Banking, 37, pp. 147-177.
Hu, S. C. (1995) Demographics, Productivity Growth and the Macroeconomics Equilibrium, Economic Inquiry, 33, pp. 592-610.
Jacobs, Phillip and Rapaport, J.R. (2002) The Economics of Health and Medical Care, Aspen Publishers, Gaithersburg, MD.
Lucas, R. (1988) On the mechanics of economic development. Journal of Monetary Economics, 22(1), pp. 3-42.
Mankiw, N.G., D. Romer and D.N. Weil. M. (1992) A Contribution to the Empirics of Economic Growth, Quaterly Journal of Economics, 107, pp.407-37.
Masson, P. R. and Tryon, R. W. (1990) Macroeconomic Effects of Projected Population Ageing in Industrial Countries, IMF Staff Papers, 37(3), pp. 568-600.
Mayer, D. (2001a) The long-term impact of health on economic growth in Latin America, World Development, 29, pp. 1025–33.
Mayer D. (2001b) The long-term impact of health on economic growth in Mexico, 1950-1995. Journal of International Development,13, pp.123-6.
Meek, Ronald L. (1962) The Economics of Physiocracy. Harvard University Press: Cambridge, Mass.
Mushkin, Selma J. (1962) Health as an Investment, Journal of Political Economy, 70, pp. 129-57.
Moock, P. and Leslie, J. (1986) Childhood Malnutrition and Schooling in the Terai Region of Nepal, Discussion Paper Education and Training Series Report, World Bank, Washington D.C
Nyce, S. A. & Schieber, S. J. (2005) The Economic Implications of Aging Societies: The Cost of Living Happily Ever After, Cambridge University Press, Cambridge.
Ovaska, T., and Takashima, R. (2006) Economic policy and the level of self-perceived Well-being: An international comparison, Journal of Socio-Economics, 35, pp. 308-325.
Owen, A.L. and Wu, S. (2007) Is Trade Good for Your Health?, Review of International Economics, 15(4), pp. 660-682.
Palloni, A. (2001) Living arrangements of older persons, Population Bulletin of the United Nations (Living arrangements of older persons – Critical issues and policy responses), 42/43, pp. 54–110.
Paxson, C. and Schady, N. (2005) Child Health and Economic Crisis in Peru, The World Bank Economic Review, 19(2), pp. 203-223.
Preston, S. H. (1975) The Changing Relation between Mortality and Level of Economic Development, Population Studies, 29(2), pp. 231-248.
Pritchett, L. and Summers, L. (1996) Wealthier is Healthier, Journal of Human Resources, 31(4), pp. 841-868.
Rajan, S. I., Misra, U. S. & Sarma, P. S. (1999) India’s Elderly – Burden or Challenge?, Sage Publications, New Delhi.
Ricardo, D. (1817) On the principles of political economy and taxation. John Murray: London.
Romer, P. (1990) Endogenous technical change. Journal of Political Economy, 98(5), pp. S71–S102.
Schultz, T. P. (1999) Health and schooling investments in Africa, Journal of Economic Perspectives, 13, pp. 67-88.
Sen, A.K. and Dreze, J. (2011) Putting growth in its place. Outlook, 14 November, pp. 50-59.
Smith, A. (1776)  An enquiry into the nature and causes of wealth of nations. Methuen Publications: London, 5e.
Solow, R. (1956) A contribution to the theory of economic growth, Quarterly Journal of Economics, 70, 65-94.
Strauss, J. and Thomas, D. (1998) Health, Nutrition and Economic Development, Journal of Economic Literature, 36, pp. 766–817.
Stroup, M.D. (2007) Economic freedom, democracy, and the quality of life, World Development, 35(1), pp.52-66.
Swan, Trevor W. (1956). Economic Growth and Capital Accumulation". Economic Record, 32(2), pp. 334–361.
United Nations, (2005) Population Challenges and Development Goals, Department of Economic and Social Affairs, Population Division, New York.
Weil, D. (2001) Accounting for the effects of health on economic growth. Mimeograph, Economic Department, Brown University; 2001.
World Bank, (1993) World Development Report 1993: Investing in Health, Oxford University Press, New York.
Zhang, J. and Zhang.J. (2005) The Effect of Life Expectancy on Fertility, Saving, Schooling and Economic Growth, The Scandinavian Journal of Economics, 107(1), pp. 45-66.
Available Versions of this Item
- Is health wealth? Results of a panel data analysis. (deposited 09. Jul 2012 12:19) [Currently Displayed]