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Health and Economic Growth: Reconciling the Micro and Macro Evidence

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  • Bloom, David E.

    () (Harvard University)

  • Canning, David

    () (Harvard School of Public Health)

  • Kotschy, Rainer

    () (LMU Munich)

  • Prettner, Klaus

    () (University of Hohenheim)

  • Schünemann, Johannes

    () (University of Göttingen)

Abstract

Micro-based and macro-based approaches have been used to assess the effects of health on economic growth. Micro-based approaches aggregate the return on individual health from Mincerian wage regressions to derive the macroeconomic effects of population health. Macro-based approaches estimate a generalized aggregate production function that decomposes output into its components. The microbased approach tends to find smaller effects than the macro-based approach, thus presenting a micromacro puzzle regarding the economic return on health. We reconcile these two strands of literature by showing that the point estimate of the macroeconomic effect of health is quantitatively close to that found by aggregating the microeconomic effects, controlling for potential spillovers of population health at the aggregate level. Our results justify using the micro-based approach to estimate the direct economic benefits of health interventions.

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  • Bloom, David E. & Canning, David & Kotschy, Rainer & Prettner, Klaus & Schünemann, Johannes, 2018. "Health and Economic Growth: Reconciling the Micro and Macro Evidence," IZA Discussion Papers 11940, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11940
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    Cited by:

    1. Bloom, David E. & Kuhn, Michael & Prettner, Klaus, 2020. "Modern Infectious Diseases: Macroeconomic Impacts and Policy Responses," IZA Discussion Papers 13625, Institute of Labor Economics (IZA).
    2. Shampa Bhattacharjee & Aparajita Dasgupta, 2019. "Disease eradication, infant mortality and fertility response :Evidence from malaria eradication in India," Working Papers 22, Ashoka University, Department of Economics.
    3. Michael Takudzwa Pasara & Tapiwa Kelvin Mutambirwa & Nolutho Diko, 2020. "The Trivariate Causality among Education, Health, and Economic Growth in Zimbabwe," Sustainability, MDPI, Open Access Journal, vol. 12(4), pages 1-15, February.
    4. Bloom, David E. & Khoury, Alexander & Kufenko, Vadim & Prettner, Klaus, 2020. "Spurring Economic Growth through Human Development: Research Results and Guidance for Policymakers," IZA Discussion Papers 12964, Institute of Labor Economics (IZA).
    5. Anne-Line Koch Helsø & Nicola Pierri & Adelina Yanyue Wang, 2019. "The Economic Impact of Healthcare Quality," IMF Working Papers 19/173, International Monetary Fund.

    More about this item

    Keywords

    productivity; population health; human capital; economic development; return on health;

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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