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Firm investment in human health capital

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  • Holland, Sara B.

Abstract

In 2005, U.S. employers spent more than $500 billion on health insurance. I argue that firms invest in worker health to mitigate the depreciation in human capital that occurs when workers get sick, which increases the productivity of human and physical capital. Using firm-level health insurance data, I find firms that have higher labor productivity, spend more on research and development, and are larger invest more in health capital. Further, health capital investment positively affects firm value and overall productivity. To identify these effects, I instrument for insurance with state mandates and the number of persons covered by insurance contracts.

Suggested Citation

  • Holland, Sara B., 2017. "Firm investment in human health capital," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 374-390.
    • Handle: RePEc:eee:corfin:v:46:y:2017:i:c:p:374-390
    DOI: 10.1016/j.jcorpfin.2017.08.003
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    2. Byaro, Mwoya & Rwezaula, Anicet & Ngowi, Nicholaus, 2023. "Does internet use and adoption matter for better health outcomes in sub-Saharan African countries? New evidence from panel quantile regression," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    3. Zhang, Yan & Zhao, Guangchuan & Gu, Hai, 2022. "Investing in health capital: Does medical insurance matter?," Research in International Business and Finance, Elsevier, vol. 61(C).
    4. Adamu Jibir & Musa Abdu & Abdullahi Buba, 2023. "Does Human Capital Influence Labor Productivity? Evidence from Nigerian Manufacturing and Service Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 805-830, June.
    5. Do, Tien Kim Thi & Van Vu, Huong, 2021. "Does formalization increase firm investment in human capital? New evidence from Vietnam," Finance Research Letters, Elsevier, vol. 42(C).

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