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Estimation of a Health Production Function: Evidence from East-European Countries

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  • Bichaka Fayissa
  • Anca Traian

Abstract

The purpose of this study is to estimate a health production function for the 13 East European countries including Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia and Ukraine. Using panel data from 1997 to 2005 on a diverse array of economic, demographic, environmental, and lifestyles factors as inputs, we analyze a health production function at the macro level in order to determine the most efficient way of allocating limited resources for improving the overall health status of countries in the sample. To control for individual country heterogeneity, we employ panel analytic methods of fixed effects, random effects, and Arellano – Bond estimator. The results indicate that economic growth as measured by GDP per capita growth, investment in human capital formation, and residence in urban areas significantly reduce infant mortality and thus improve the health status of countries in the sample. These findings are useful, not only for serving as background for health care policy decisions, but also for a better understanding of the factors that affect the health condition of the region.

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File URL: http://capone.mtsu.edu/berc/working/WPSeriies_7_29_2011Project-health1-1.pdf
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Paper provided by Middle Tennessee State University, Department of Economics and Finance in its series Working Papers with number 201104.

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Date of creation: Jul 2011
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Handle: RePEc:mts:wpaper:201104

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Web page: http://www.mtsu.edu/~berc/working/Economics_Working_Papers.html
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Keywords: Health Status; Eastern European Countries; Fixed-Effects; Random-Effects; Arellano-Bond estimator;

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  1. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  2. Bhargava, Alok & Jamison, Dean T. & Lau, Lawrence J. & Murray, Christopher J. L., 2001. "Modeling the effects of health on economic growth," Journal of Health Economics, Elsevier, vol. 20(3), pages 423-440, May.
  3. Jacobson, Lena, 2000. "The family as producer of health -- an extended grossman model," Journal of Health Economics, Elsevier, vol. 19(5), pages 611-637, September.
  4. Schultz, T. Paul, 2004. "Health economics and applications in developing countries," Journal of Health Economics, Elsevier, vol. 23(4), pages 637-641, July.
  5. Ettner, Susan L., 1996. "New evidence on the relationship between income and health," Journal of Health Economics, Elsevier, vol. 15(1), pages 67-85, February.
  6. Mark C. Berger & J. Paul Leigh, 1989. "Schooling, Self-Selection, and Health," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 433-455.
  7. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1, octubre-d.
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