Does the U.S. health care sector suffer from Baumol's cost disease? Evidence from the 50 states
AbstractThis study examines if health care costs in the United States are affected by Baumol's cost disease. It relies on an empirical test proposed by Hartwig (2008) and extended by Colombier (2010) and uses a panel data set of 50 states over the 1980–2009 period. The results suggest that health care costs grow more rapidly when economy-wide wage increases exceed productivity gains. The findings are fairly robust with respect to time- and state-fixed effects, individual state time trends, and two-stage least square estimation. Consequently, this study suggests that the U.S. health care sector suffers from Baumol's cost disease.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Health Economics.
Volume (Year): 32 (2013)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/inca/505560
Health care costs; Baumol cost disease; Unbalanced growth; Service sector; Aggregate productivity;
Find related papers by JEL classification:
- I10 - Health, Education, and Welfare - - Health - - - General
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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