We assess quantitatively the effect of exogenous health improvements on output per capita. Our simulation model allows for a direct effect of health on worker productivity, as well as indirect effects that run through schooling, the size and age-structure of the population, capital accumulation, and crowding of fixed natural resources. The model is parameterized using a combination of microeconomic estimates, data on demographics, disease burdens, and natural resource income in developing countries, and standard components of quantitative macroeconomic theory. We consider both changes in general health, proxied by improvements in life expectancy, and changes in the prevalence of two particular diseases: malaria and tuberculosis. We find that the effects of health improvements on income per capita are substantially lower than those that are often quoted by policy-makers, and may not emerge at all for three decades or more after the initial improvement in health. The results suggest that proponents of efforts to improve health in developing countries should rely on humanitarian rather than economic arguments.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
14449.
Length: Date of creation: Oct 2008 Date of revision: Publication status: published as Quamrul H. Ashraf, Ashley Lester, David N. Weil. "When Does Improving Health Raise GDP?," in Daron Acemoglu, Kenneth Rogoff and Michael Woodford, editors, "NBER Macroeconomics Annual 2008" University of Chicago Press (2008) Handle: RePEc:nbr:nberwo:14449
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Quamrul H. Ashraf & Ashley Lester & David N. Weil, 2008.
"When Does Improving Health Raise GDP?,"
NBER Chapters,
in: NBER Macroeconomics Annual 2008
National Bureau of Economic Research, Inc.
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Find related papers by JEL classification: I10 - Health, Education, and Welfare - - Health - - - General O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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Gary D. Hansen & Edward C. Prescott, 2002.
"Malthus to Solow,"
American Economic Review,
American Economic Association, vol. 92(4), pages 1205-1217, September.
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Gary D. Hansen & Edward C. Prescott, 1998.
"Malthus to Solow,"
NBER Working Papers
6858, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Gary D. Hansen & Edward C. Prescott, 1999.
"Malthus to Solow,"
Staff Report
257, Federal Reserve Bank of Minneapolis.
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