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The Relationship Between Health and Growth: When Lucas Meets Nelson-Phelps

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  • Philippe Aghion
  • Peter Howitt
  • Fabrice Murtin

Abstract

This paper revisits the relationship between health and growth in light of modern endogenous growth theory. We propose a unified framework that encompasses the growth effects of both the rate of improvement of health and the level of health. Based on cross-country regressions over the period 1960-2000, where we instrument for both variables, we find that a higher initial level and a higher rate of improvement in life expectancy both have a significantly positive impact on per capita GDP growth. Then, restricting attention to OECD countries, we find supportive evidence that only the reduction in mortality below age forty generates productivity gains, which in turn may explain why the positive correlation between health and growth in cross-OECD country regressions appears to have weakened since 1960.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15813.

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Date of creation: Mar 2010
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Publication status: published as Philippe Aghion & Peter Howitt & Fabrice Murtin, 2011. "The Relationship Between Health and Growth: When Lucas Meets Nelson-Phelps," Review of Economics and Institutions, Università di Perugia, Dipartimento Economia, Finanza e Statistica, vol. 2(1).
Handle: RePEc:nbr:nberwo:15813

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  1. Jere R. Behrman & Mark R. Rosenzweig, 2004. "Returns to Birthweight," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 586-601, May.
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  13. Murtin, Fabrice & Wacziarg, Romain, 2011. "The Democratic Transition," CEPR Discussion Papers 8599, C.E.P.R. Discussion Papers.
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