IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Healthy, educated and wealthy: A primer on the impact of public and private welfare expenditures on economic growth

  • Beraldo, Sergio
  • Montolio, Daniel
  • Turati, Gilberto

In this paper, we provide first evidence of the impact of public and private expenditures in health and education on economic growth, via their influence on people's health, skills and knowledge. We consider a growth accounting framework in order to test whether countries that devote a larger amount of resources to the consumption of health and educational services experience higher growth rates. We also test whether the effects on economic growth of public expenditure in health and education differ from those of private expenditure. Our empirical analysis is based on a panel of 19 OECD countries observed between 1971 and 1998. The results are consistent with the hypothesis that health and education expenditure affects positively growth. The estimated impact is stronger for health than for education. More importantly, we find some evidence that public expenditure influences GDP growth more than private expenditure.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/B6W5H-4WM7523-1/2/1f72e8ab4b028289d809a418f214913c
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 38 (2009)
Issue (Month): 6 (December)
Pages: 946-956

as
in new window

Handle: RePEc:eee:soceco:v:38:y:2009:i:6:p:946-956
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620175

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Tim Besley, 2001. "From micro to macro: public policies and aggregate economic performance," Fiscal Studies, Institute for Fiscal Studies, vol. 22(3), pages 357-374, September.
  2. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  3. Guido Tabellini, 2004. "The Role of the State in Economic Development," Working Papers 265, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. Aghion, Philippe & Caroli, Eve & Garcia-Penalosa, Cecilia, 1999. "Inequality and economic growth: the perspective of the new growth theories," CEPREMAP Working Papers (Couverture Orange) 9908, CEPREMAP.
  5. Deaton, A., 2001. "Health, Inequality, and Economic Development," Papers 200, Princeton, Woodrow Wilson School - Development Studies.
  6. Sergio Beraldo & Daniel Montolio Estivill & Gilberto Turati, 2005. "Healthy, Educated and Wealthy: Is the Welfare State Really Harmful for Growth?," Working Papers in Economics 127, Universitat de Barcelona. Espai de Recerca en Economia.
  7. Barro, Robert J, 1999. "Notes on Growth Accounting," Journal of Economic Growth, Springer, vol. 4(2), pages 119-37, June.
  8. Gradstein, Mark & Justman, Moshe, 2000. "Human capital, social capital, and public schooling," European Economic Review, Elsevier, vol. 44(4-6), pages 879-890, May.
  9. Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
  10. Afonso, António & Ebert, Werner & Schuknecht, Ludger & Thöne, Michael, 2005. "Quality of public finances and growth," Working Paper Series 0438, European Central Bank.
  11. Arild Aakvik & Kjell G. Salvanes & Kjell Vaage, 2005. "Educational Attainment and Family Background," German Economic Review, Verein für Socialpolitik, vol. 6(3), pages 377-394, 08.
  12. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2001. "The survival of the welfare state," Economics Working Papers 603, Department of Economics and Business, Universitat Pompeu Fabra.
  13. Easterly, William & Rebelo, Sérgio, 1994. "Fiscal Policy and Economic Growth: An Empirical Investigation," CEPR Discussion Papers 885, C.E.P.R. Discussion Papers.
  14. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
  15. Trinh Le & John Gibson & Les Oxley, 2003. "Cost- and Income-based Measures of Human Capital," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 271-307, 07.
  16. James Heckman & Pedro Carneiro, 2003. "Human Capital Policy," NBER Working Papers 9495, National Bureau of Economic Research, Inc.
  17. Rodrik, Dani & Alesina, Alberto, 1994. "Distributive Politics and Economic Growth," Scholarly Articles 4551798, Harvard University Department of Economics.
  18. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
  19. Herbertsson, Tryggvi Thor, 2003. "Accounting for human capital externalities with an application to the Nordic countries," European Economic Review, Elsevier, vol. 47(3), pages 553-567, June.
  20. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  21. Don Webber, 2002. "Policies to stimulate growth: should we invest in health or education?," Applied Economics, Taylor & Francis Journals, vol. 34(13), pages 1633-1643.
  22. Rajkumar, Andrew Sunil*Swaroop, Vinaya, 2002. "Public spending and outcomes : does governance matter?," Policy Research Working Paper Series 2840, The World Bank.
  23. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
  24. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
  25. Karla Hoff & Andrew B. Lyon, 1994. "Non-Leaky Buckets: Optimal Redistributive Taxation and Agency Costs," NBER Working Papers 4652, National Bureau of Economic Research, Inc.
  26. Pearson, Mark & Martin, John P., 2005. "Should We Extend the Role of Private Social Expenditure?," IZA Discussion Papers 1544, Institute for the Study of Labor (IZA).
  27. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
  28. Eric A. Hanushek, 1996. "Measuring Investment in Education," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 9-30, Fall.
  29. Tullio Jappelli & Luigi Pistaferri & Guglielmo Weber, 2007. "Health care quality, economic inequality, and precautionary saving," Health Economics, John Wiley & Sons, Ltd., vol. 16(4), pages 327-346.
  30. Atkinson, A. B., 1995. "Is the Welfare State necessarily an obstacle to economic growth?," European Economic Review, Elsevier, vol. 39(3-4), pages 723-730, April.
  31. Giacomo Bonanno & John Roemer & Louis Putterman & Wen Hai & Shunli Yao, 2003. "Does Egalitarianism Have a Future?," Working Papers 969, University of California, Davis, Department of Economics.
  32. Sandra L. Decker & Dahlia K. Remler, 2004. "How Much Might Universal Health Insurance Reduce Socioeconomic Disparities in Health? A Comparison of the US and Canada," NBER Working Papers 10715, National Bureau of Economic Research, Inc.
  33. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  34. Barr, Nicholas, 1992. "Economic Theory and the Welfare State: A Survey and Interpretation," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 741-803, June.
  35. Sudhir Anand & Martin Ravallion, 1993. "Human Development in Poor Countries: On the Role of Private Incomes and Public Services," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 133-150, Winter.
  36. Gupta, Sanjeev & Verhoeven, Marijn & Tiongson, Erwin R., 2002. "The effectiveness of government spending on education and health care in developing and transition economies," European Journal of Political Economy, Elsevier, vol. 18(4), pages 717-737, November.
  37. Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
  38. repec:dau:papers:123456789/10091 is not listed on IDEAS
  39. José A. Herce & Simón Sosvilla-Rivero & Juan J. De Lucio, . "Growth and the Welfare State in the EU: A causality analysis," Working Papers 98-12, FEDEA.
  40. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2002. "Vintage Human Capital, Demographic Trends, and Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 104(2), pages 340-375, June.
  41. Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
  42. Perotti, Roberto, 1992. "Income Distribution, Politics, and Growth," American Economic Review, American Economic Association, vol. 82(2), pages 311-16, May.
  43. Assar Lindbeck, 1997. "The Swedish Experiment," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1273-1319, September.
  44. Lorraine Dearden & Leslie McGranahan & Barbara Sianesi, 2004. "The role of credit constraints in educational choices: evidence from NCDS and BCS70," LSE Research Online Documents on Economics 19447, London School of Economics and Political Science, LSE Library.
  45. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  46. Martin Zagler & Georg Dürnecker, 2003. "Fiscal Policy and Economic Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 17(3), pages 397-418, 07.
  47. Steven N. Durlauf, 2002. "On the Empirics of Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 459-479, November.
  48. Massimo Baldini & Gilberto Turati, 2006. "Long-run and short-run constraints in the access to private health care services: evidence from selected european countries," Center for the Analysis of Public Policies (CAPP) 0016, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
  49. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
  50. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 313-344, April.
  51. Atkinson, Anthony B., 1995. "The Welfare State and Economic Performance," National Tax Journal, National Tax Association, vol. 48(2), pages 171-98, June.
  52. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  53. Knowles, Stephen & Owen, P Dorian, 1997. "Education and Health in an Effective-Labour Empirical Growth Model," The Economic Record, The Economic Society of Australia, vol. 73(223), pages 314-28, December.
  54. A. B. Atkinson, 1999. "The Economic Consequences of Rolling Back the Welfare State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011719, December.
  55. Amartya Sen, 2000. "A Decade of Human Development," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 1(1), pages 17-23.
  56. repec:spr:aphecp:v:3:y:2004:i:4:p:205-216 is not listed on IDEAS
  57. Streeten, Paul, 1994. "Human Development: Means and Ends," American Economic Review, American Economic Association, vol. 84(2), pages 232-37, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:38:y:2009:i:6:p:946-956. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.