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Health spending and public pension: evidence from panel data


  • Yonghong An
  • Kai Zhao
  • Rong Zhou


This article empirically investigates the determinants of aggregate health expenditure in a panel of OECD countries from 1980 to 2005. We differ from most existing studies by testing some new determinants motivated by recent theoretical advances in the literature. We find that a one percentage increase in public pension payments per elderly person leads to approximately a one third percentage increase in aggregate health spending, and this effect is significant and robust across a variety of model specifications. A back of the envelope calculation based on this estimate suggests that the expansion of the public pension programme on average accounts for approximately over one fifth of the rise in aggregate health expenditure as a share of GDP in the set of OECD countries during 1980--2005. In addition, we find that the estimated effect of GDP per capita in our model ranges from 0.66 to 0.80, which is consistent with the results from some recent studies, and thus further reinforces the finding in the literature that health care is not a luxury good.

Suggested Citation

  • Yonghong An & Kai Zhao & Rong Zhou, 2016. "Health spending and public pension: evidence from panel data," Applied Economics, Taylor & Francis Journals, vol. 48(11), pages 987-1004, March.
  • Handle: RePEc:taf:applec:v:48:y:2016:i:11:p:987-1004
    DOI: 10.1080/00036846.2015.1090556

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    References listed on IDEAS

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    Cited by:

    1. Potrafke, Niklas, 2017. "Partisan politics: The empirical evidence from OECD panel studies," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 712-750.

    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I1 - Health, Education, and Welfare - - Health


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