Health Externalities to Productivity and Efficient Health Subsidies

Siew Ling Yew and Jie Zhang

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: We explore optimal health subsidies in a dynastic model with health externalities to productivity that cause low health spending, productivity, longevity, savings and labor but high fertility. Public or firms’ health subsidies increase health spending, longevity and productivity and decrease fertility. Labor income taxes reduce the marginal benefit of health spending and the time cost of raising a child, while consumption taxes reduce the relative cost of raising a child. Appropriate public or firms’ health subsidies can internalize the externalities through age-specific labor income taxes and consumption taxes. Calibrating the model to the Australia economy, numerical results suggest policy improvements.

Keywords: Health Externality; Longevity; Productivity; Fertility; Savings (search for similar items in EconPapers)
JEL-codes: H21 I13 I15 J13 O41 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2023-07
New Economics Papers: this item is included in nep-age, nep-dge and nep-pub
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https://cama.crawford.anu.edu.au/sites/default/fil ... 1_2023_yew_zhang.pdf

Related works:
Working Paper: Health externalities to productivity and efficient health subsidies (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2023-31

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