The Effect of Health on Economic Growth: Theory and Evidence

David Bloom, David Canning and J.P. Sevilla

No 8587, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Macroeconomists acknowledge the contribution of human capital to economic growth, but their empirical studies define human capital solely in terms of schooling. In this paper, we extend production function models of economic growth to account for two additional variables that microeconomists have identified as fundamental components of human capital: work experience and health. Our main result is that good health has a positive, sizable, and statistically significant effect on aggregate output. We find little variation across countries in average work experience, thus differentials in work experience account for little variation in rates of economic growth. Finally, we find that the effects of average schooling on national output are consistent with microeconomic estimates of the effects of individual schooling on earnings, suggesting that education creates no discernible externalities.

Date: 2001-11
New Economics Papers: this item is included in nep-dev, nep-hea and nep-mac
Note: AG EH IFM LS
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Published as Bloom, David E., David Canning and Jaypee Sevilla. "The Effect of Health on Economic Growth: A Production Function Approach." World Development 32, 1 (2004): 1–13.

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