Edited by Neri Salvadori and Arrigo Opocher
Chapter 9: Health Funding, Inequality and Economic Growth
9. Health funding, inequality and economic growth* Davide Dottori 9.1. INTRODUCTION 9.1.1. Health and Economic Growth Health is widely recognized to be an important component of human capital and a prerequisite for sustained economic growth (Hazan and Zoabi, 2006; Cervellati and Sunde, 2007). One stream of literature has stressed the positive effect of health on productivity growth: good health was found to have a positive and statistically significant effect on labour outcome. Fogel (1997) estimates that nutritional improvements alone contributed about 20– 30 per cent of income growth per capita not explained by factor accumulation in Britain during 1780–1979. Shastry and Weil (2003) estimate that health differences can explain up to one-third of cross-country income per capita variation after controlling for other measures of factor accumulation. Mayer-Foulkes (2004) shows the positive effect of early child health and on the probability of obtaining a higher education later in life. In a recently released report, UNICEF (2004) find that the impacts of food deficiencies on mortality, sicknesses, and on early child, mother and adult cognitive ability are significant. Adult health contributes directly to adult income: healthier workers may be productive, or at least less likely to be absent due to illness (or illness of a family member). Howitt (2005) highlights the beneficial effects of health on creativity, learning capacity and copying skills. Clearly, there exists a relation from income to health, since richer countries can afford better health services. Nevertheless, Devlin and Hansen (2001) find Granger causality running in both directions...
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