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Health externalities to productivity and efficient health subsidies

Siew Ling Yew () and Jie Zhang
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Siew Ling Yew: Department of Economics, Monash University

No 2023-13, Monash Economics Working Papers from Monash University, Department of Economics

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 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-age, nep-dge, nep-hea, nep-pub and nep-sea
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Working Paper: Health Externalities to Productivity and Efficient Health Subsidies (2023) Downloads
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