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Convergence of health care spending and health outcomes in the EUropean Union, 1960-95

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Author Info
John Nixon
Abstract

Convergence in health expenditure in the countries of the European Union (EU) has been demonstrated to be occurring in previous studies. The aim of this paper is to identify and discuss the reasons for this finding and to present new evidence confirming convergence in health outcomes, as represented by life expectancy and infant mortality rates. The statistical methods used, s and b-convergence analysis, are well established in macro-economic growth analyses and based on the neo-classical growth model which predicts convergence in income for homogenous countries such as those forming the EU. The analyses reveal a common trend in that Southern Mediterranean countries have generally exhibited upward convergence towards the mean in health expenditure, and convergence towards the EU mean in improving directions for health outcomes. In contrast, EU countries of the North, particularly those of Scandinavia, exhibit downward convergence towards the EU mean or below it in health expenditure, whilst their health outcome measures have generally been displaying a decreasing advantage over the EU mean over the periods of analysis. The results are briefly considered in relation to the factors that help to explain the results, including the question of whether a causal relationship between health expenditure and health outcomes exists, the nature and impact of health care reforms throughout the 1970s, 80s and 90s in countries contributing most to the observed convergence, and the predictions of the neoclassical growth model which underpin the results.

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File URL: http://www.york.ac.uk/inst/che/pdf/DP183.pdf
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File Function: First version, 2000
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Paper provided by Centre for Health Economics, University of York in its series Working Papers with number 183chedp.

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Length: 27 pages
Date of creation: Dec 2000
Date of revision:
Handle: RePEc:chy:respap:183chedp

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Keywords: convergence; divergence; health expenditure; health outcomes; causal relationship;

References listed on IDEAS
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  1. Bernard, Andrew B. & Durlauf, Steven N., 1996. "Interpreting tests of the convergence hypothesis," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 161-173. [Downloadable!] (restricted)
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  2. Quah, Danny, 1993. "Galton's Fallacy and Tests of the Convergence Hypothesis," CEPR Discussion Papers 820, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995-1), pages 1-118. [Downloadable!]
  4. Xavier Sala-i-Martin, 1994. "Regional Cohesion: Evidence and Theories of Regional Growth and Convergence," Economics Working Papers 104, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  5. Sala-i-Martin, X., 1994. "Regional Cohesion: Evidence and the Theories of Regional Growth and Convergence," Papers 716, Yale - Economic Growth Center.
  6. Streissler, Erich, 1979. "Growth Models as Diffusion Processes," Kyklos, Blackwell Publishing, vol. 32(1/2), pages 251-69.
  7. Pierre-Yves Crémieux & Pierre Ouellette & Caroline Pilon, 1999. "Health care spending as determinants of health outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 627-639.
  8. Hitiris, Theo, 1997. "Health Care Expenditure and Integration in the Countries of the European Union," Applied Economics, Taylor and Francis Journals, vol. 29(1), pages 1-6, January. [Downloadable!] (restricted)
  9. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence Across States and Regions," Papers 629, Yale - Economic Growth Center.
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