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Health Sector Structural Change

Author

Listed:
  • Nick Pretnar
  • Maria Feldman

Abstract

The US health-services sector has grown in terms of its expenditure share and relative price. Using a two-sector general equilibrium model with monopolistic competition and endogenous population, we find that relative price growth is almost entirely attributable to increasing relative sectoral markups. Demand effects from aging play only a minor role driving up prices and expenditure shares. Controlling for GE effects and rising relative markups, we estimate that health-sector TFP has grown since the 1980s at a rate greater than 1 percent annually, dampening relative price growth while leading to higher health-sector output, partially driving up aggregate expenditure shares.

Suggested Citation

  • Nick Pretnar & Maria Feldman, 2026. "Health Sector Structural Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 18(4), pages 94-133, October.
    • Handle: RePEc:aea:aejmac:v:18:y:2026:i:4:p:94-133
    DOI: 10.1257/mac.20240013
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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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