Individual Investments in Education and Health: Policy Responses and Interactions

Jared Carbone and Snorre Kverndokk

No 6154, CESifo Working Paper Series from CESifo

Abstract: Empirical studies show that years of schooling are positively correlated with good health. The implication may go from education to health, from health to education, or from factors that influence both variables. We formalize a model that determines an individual’s demand for knowledge and health based on the causal effects, and study the impacts on the individual’s decisions of policy instruments such as subsidies on medical care, subsidizing schooling, income tax reduction, lump sum transfers and improving health at young age. Our results indicate that income redistribution policies may be the best instrument to improve welfare, while a medical care subsidy is the best instrument for longevity. Subsidies to medical care or education would require large imperfections in these markets to be more welfare improving than distributional policies.

Keywords: demand for health; demand for education; human capital; numerical modeling; causality (search for similar items in EconPapers)
JEL-codes: C61 D91 I12 I21 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6154

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