Hassan, Gazi and Cooray, Arusha (2012): The effect of female and male health on economic growth: cross-country evidence within a production function framework.
Download (526kB) | Preview
It is widely believed by development economists that the role of human capital is one of the most fundamental determinants of economic growth. Sustained growth depends on the level of human capital whose stocks increase due to better education, higher levels of health, new learning and training procedure. The intuition that good health raises the level of human capital and has a positive effect on productivity and economic growth has been modelled by enodogenous growth theorists. But empirically ascertaining the causal relationship between health and growth is more difficult due to the possible existence of endogeneity between these two variables. We use a production function based approach and model the role of health as a regular factor of production. Additionally, we depart from all the previous literature by estimating the gender disaggregated effect of human health on economic growth. We adopt a constant return to scale production function that fits the data in the microeconometric literature on return to human capital. Using this particular production function, we disaggregate the measures of human capital by including male and female life expectancy and school enrolments. Allowing for the dynamics of TFP to be embedded in the production function we empirically test it in growth form using various estimators appropriate for our data. Our main finding is that male life expectancy has a positive effect on the growth of income while female life expectancy has a negative effect, controlling for unobserved time and country effects in a panel of 83 countries from 1960 - 2009. We use lag differences of life expectancy and school enrolments and lagged growth rates of other inputs as instruments for controlling the endogenity of health in the growth regressions. We check for the robustness of the results with use of ‘deletion diagnostics’ to identify influential observations and outliers. The results continue to show that male life expectancy has a positive effect on income growth while that of female has a negative effect.
|Item Type:||MPRA Paper|
|Original Title:||The effect of female and male health on economic growth: cross-country evidence within a production function framework|
|Keywords:||Health and economic development; economic growth, endogeneity; panel data; TFP; convergence; economics of gender|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence
I - Health, Education, and Welfare > I1 - Health > I12 - Health Behavior
J - Labor and Demographic Economics > J1 - Demographic Economics > J16 - Economics of Gender ; Non-labor Discrimination
|Depositing User:||Gazi M. Hassan|
|Date Deposited:||16. Jul 2012 13:16|
|Last Modified:||14. Feb 2013 11:46|
Acemoglu and Johnson (2007) Disease and Development: The Effect of Life Expectancy on Economic Growth, Journal of Political Economy, 115, 925-985.
Aghion P, Howitt P and Murtin F (2010) The Relationship between Health and Growth: When Lucas Meets Nelson-Phelps, NBER Working Paper No. 15813.
Amemiya T (1971) The Estimation of a Variance in a Variance Components Model, International Economic Review, 12, 1-13.
Arellano M and Bover O (1995) “Another Look at the Instrumental Variables Estimation of Error Components Models” Journal of Econometrics, 68, 29-51.
Baltagi B and Wu P (1999) Unequally Spaced Panel Data Regressions with AR(1) Disturbances, Econometric Theory, 15, 814-823.
Barro, R. (1996). Health and economic growth, Mimeo. Cambridge, MA: Harvard University.
Barro R and Lee J (1994).Sources of Economic Growth, Carnegie-Rochester Conference Series on Public Policy, 40, 1-46.
Barro and Sala-i-Martin (1995) Economic Growth, New York: McGraw Hill
Belsley D, Kuh E and Welsch R (1980) Regression Diagnostics, Wiley.
Bhargava, A. Jamison, D., Lau, L., and Murray, C (2001) Modelling the Effects of Health on Economic Growth, Journal of Health Economics, 718, 1-18.
Bloom D, Canning D and Fink G (2009) Disease and Development Revisited, NBER Working Paper No.15137.
Bloom D, Canning D and Malaney P (2000). Demographic Change and Economic Growth in Asia, Population and Development Review, 26(supp.), 257–290.
Bloom D, Canning D and Sevilla J (2004) The Effect of Health on Economic Growth,” World Development, 32, 1-13.
Bloom D, Sachs J, Collier P and Udry C (1998) Geography, Demography, and Economic Growth in Africa, Brookings Papers on Economic Activity, 2, 207–295.
Bloom D and Williamson J (1998) Demographic Transitions and Economic Miracles in Emerging Asia, World Bank Economic Review, 12, 419-455.
Bosworth B and Collins S (2003) The Empirics of Growth: An Update, Brookings Papers on Economic Activity, 2, 113-179.
Blundell R and Bond S (1998) “Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,” Journal of Econometrics, 87, 115-143.
Caselli F, Esquivel G and Lefort F (1996) Reopening the Convergence Debate: A New Look at the Cross Country Growth Empirics, Journal of Economic Growth, 1, 363-389.
Collins S and Bosworth (1996) Economic Growth in East Asia: Accumulation vs Assimilation, Brookings Papers on Economic Activity, 2, 135-191.
Donald S and Maddala G (1993) 24 Identifying Outliers and Influential Observations in Econometric Models, Handbook of Statistics, 11, 663-701.
Fiebig, DG (1992) Diagnostic checking in practice: the case of outliers and in¯uential data. University of Sydney, mimeo
Kiviet J (1995) On Bias, Inconsistency, and Efficiency of Various Estimators in Dynamic Panel Data Models, Journal of Econometrics, 68, 53-78.
Knowles S and Owen P D (1995) Health Capital and Cross Country Variation in Income Per Capita in the Mankiw-Romer-Weil Model, Economics Letters, 48, 99-106.
Lillard L and Willis R (1978) Dynamic Aspects of Learning Mobility, Econometrics, 46, 985-1012.
Lorentzen. P, McMillan, M and Wacziarg,R.(2008) Death and development, Journal of Economic Growth, vol. 13(2), pp 81-124
Mankiw, N.G., D. Romer and D. Weil. (1992), “A Contribution to the Empirics of Economic Growth,” Quarterly Journal of Economics, 107, 407-437.
McDonald S and Roberts J (2002) Growth and Multiple Forms of Human Capital in an Augmented Solow Model: A Panel Data Investigation, Economics Letters, 74, 271-276.
Mincer J (1974) “Schooling Experience and Earnings,” NBER http://www.nber.org/books/minc74-1
Aghion, P., P. Howitt and F. Murtin (2010) The Relationship Between Health and Growth: When Lucas Meets Nelson-Phelps, NBER Working Papers 15813,
Roodman D (2009) A Note on the Theme of Too Many Instruments, Oxford Bulletin of Economics and Statistics, 71, 135-158.
Sachs J and Warner A (1997). Sources of Slow Growth in African Economies, Journal of African Economies, 6, 335–337.
Wallace, T.D., and Hussein, A. (1969). The Use of Error Components Models in Combining Cross Section with Time Series Data, Econometrica, 37(1), 5-72.
Weil D (2007) Accounting for the Effect of Health on Economic Growth, Quarterly Journal of Economics, 122,1265-1306.
Wooldridge J (2001) Econometric Analysis of Cross Section and Panel Data, 2nd Edition, MIT Press
World Bank (1996) Development in Practice: Improving Women’s Health in India, Washington DC, World Bank.
World Bank (2011) World Development Indicators.