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Welfare-improving policy on medical tourism and labor productivity: A theoretical analysis

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  • Beladi, Hamid
  • Chao, Chi-Chur
  • Ee, Mong Shan
  • Hollas, Daniel

Abstract

This paper considers welfare and wage inequality effects of developing medical tourism on the host country from a theoretical point of view. Due to the competition between public healthcare provision and medical tourism, the development of medical tourism might reduce labor productivity and thus widen wage inequality via the increased wage rates of healthcare workers and decreased wage rates of production workers. In addition, the expansion of medical tourism can lower social welfare of the host country through a decline in labor productivity caused by reduced public healthcare provision. A tax-subsidy welfare-improving scheme is suggested to mitigate the unfavorable productivity effect of medical tourism on the host economy. This theoretical result fits into current empirical evidence on medical tourism.

Suggested Citation

  • Beladi, Hamid & Chao, Chi-Chur & Ee, Mong Shan & Hollas, Daniel, 2023. "Welfare-improving policy on medical tourism and labor productivity: A theoretical analysis," Economic Systems, Elsevier, vol. 47(1).
    • Handle: RePEc:eee:ecosys:v:47:y:2023:i:1:s0939362522001145
    DOI: 10.1016/j.ecosys.2022.101052
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    References listed on IDEAS

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    1. Hyun-Jeong Ban & Hak-Seon Kim, 2020. "Applying the Modified Health Belief Model (HBM) to Korean Medical Tourism," IJERPH, MDPI, vol. 17(10), pages 1-13, May.
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    3. Brian R. Copeland, 2012. "Tourism And Welfare-Enhancing Export Subsidies," The Japanese Economic Review, Japanese Economic Association, vol. 63(2), pages 232-243, June.
    4. Andrea Whittaker, 2015. "The implications of medical travel upon equity in lower-and middle-income countries," Chapters, in: Neil Lunt & Daniel Horsfall & Johanna Hanefeld (ed.), Handbook on Medical Tourism and Patient Mobility, chapter 11, pages 112-122, Edward Elgar Publishing.
    5. Saba Salehi-Esfahani & Jorge Ridderstaat & Ahmet Bulent Ozturk, 2021. "Health tourism in a developed country with a dominant tourism market: the case of the United States’ travellers to Canada," Current Issues in Tourism, Taylor & Francis Journals, vol. 24(4), pages 536-553, February.
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    More about this item

    Keywords

    Medical tourism; Labor productivity; Cross subsidization; Wage inequality; Social welfare;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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