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Political Institutions and Health Expenditure

Johannes Blum, Florian Dorn () and Axel Heuer

No 345, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: We examine how political institutions influence health expenditure by using a panel of 151 developing and developed countries for the years 2000 to 2015 and four measures of democracy. Our pooled OLS analysis shows that democracies have 20–30% higher government health expenditure relative to GDP than their autocratic counterparts. An instrumental variable approach which exploits the regional diffusion of democracy confirms the positive effect of democracy on government health expenditure. Panel fixed effects and event study models also suggest a positive within-country effect of democratization on government health expenditure within a short period after regime transition. Democratic rule, however, does not turn out to significantly influence private health expenditure compared to autocracies. We conclude that democracies may care more for their citizens and strive to decrease inequalities in the access to health care.

Keywords: Democracy; panel data; instrumental variable; development; health expenditure (search for similar items in EconPapers)
JEL-codes: C23 C26 H51 I15 I18 P50 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-dev, nep-hea and nep-pol
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