Health expenditure and income in the United States
AbstractThis paper investigates the long-run economic relationship between health care expenditure and income in the US at a State level. Using a panel of 49 US States over the period 1980–2004, we study the non‐stationarity and co‐integration between health spending and income, ultimately measuring income elasticity of health care. The tests we adopt allow us to explicitly control for cross‐section dependence and unobserved heterogeneity. Specifically, in our regression equations we assume that the error has a multifactor structure, which may capture global shocks and local spill overs in health expenditure. Our results suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in other US studies. Further, we detect significant spatial concentration in US health spending. Our broad perspective of cross‐section dependence as well as the methods used to capture it give new insights on the debate over the relationship between health spending and income. Copyright (C) 2009 John Wiley & Sons, Ltd.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Health Economics.
Volume (Year): 19 (2010)
Issue (Month): 12 (December)
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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749
health expenditure ; income elasticity ; cross section ; dependence ; panels ;
Other versions of this item:
- Elisa Tosetti & Francesco Moscone, 2007. "Health Expenditure and Income in the United States," Discussion Papers in Economics 07/14, Department of Economics, University of Leicester.
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
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