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Health and Economic Growth: Reconciling the Micro and Macro Evidence

Johannes Schünemann (), David E. Bloom, David Canning (), Rainer Kotschy and Klaus Prettner ()

Annual Conference 2018 (Freiburg, Breisgau): Digital Economy from Verein für Socialpolitik / German Economic Association

Abstract: There are two prominent methods to assess the effects of health on economic growth. The first is based on the estimated returns on health by means of Mincer wage regressions that are aggregated to derive the macroeconomic effects of population health. The second approach is based on the estimation of a generalized aggregate production function that decomposes human capital into its different components, in particular, population health. While the overwhelming majority of studies based on both methods indicates a positive effect of health on economic growth, the size of the effect is still subject to intensive debate. We show that, after appropriately controlling for potential spillover effects of population health at the aggregate level, the point estimate of the macroeconomic effect of health is remarkably close to the one found by aggregating the microeconomic effects. Specifically, an increase in the adult survival rate of 10 percentage points is associated with a 9.1 percent increase in labor productivity. This effect is sizable and adds a strong argument for investments in population health over and above the direct welfare benefits of good health.

Keywords: Productivity; Population Health; Micro-Macro Consistency; Human Capital; Economic Development (search for similar items in EconPapers)
JEL-codes: I15 I25 J11 O11 O15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea
Date: 2018
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Related works:
Working Paper: Health and Economic Growth: Reconciling the Micro and Macro Evidence (2019) Downloads
Working Paper: Health and Economic Growth: Reconciling the Micro and Macro Evidence (2018) Downloads
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