The Effect of Changes in Drug Utilization on Labor Supply and Per Capita Output
We hypothesize that pharmaceutical-embodied technical progress increases per capita output via its effect on labor supply (the employment rate and hours worked per employed person). We examine the effect of changes in both the average quantity and average vintage (FDA approval year) of drugs consumed on labor supply, using longitudinal, condition-level data. The estimates indicate that conditions for which there were above-average increases in utilization of prescriptions during 1996-1998 tended to have above-average reductions in the probability of missed work days. The estimated value to employers of the reduction in missed work days appears to exceed the employer's increase in drug cost. The estimates are also consistent with the hypothesis that an increase in a condition's mean drug vintage reduces the probability that people with that condition will experience activity and work limitations, and reduces their average number of restricted-activity days. The estimates imply that activity limitations decline at the rate of about one percent per year of drug vintage, and that the rate of pharmaceutical-embodied technical progress with respect to activity limitations is about 18% per year. Estimates of the cost of the increase in drug vintage necessary to achieve reductions in activity limitations indicate that increases in drug vintage tend to be very 'cost-effective.'
|Date of creation:||Sep 2002|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
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.:
- Charles R. Hulten, 1992. "Growth Accounting When Technical Change is Embodied in Capital," NBER Working Papers 3971, National Bureau of Economic Research, Inc.
- Frank R. Lichtenberg & Tomas J. Philipson, 2002.
"The Dual Effects of Intellectual Property Regulations: Within- and Between-Patent Competition in the U.S. Pharmaceuticals Industry,"
Journal of Law and Economics,
University of Chicago Press, vol. 45(S2), pages 643-672.
- Frank R. Lichtenberg & Tomas J. Philipson, 2002. "The Dual Effects of Intellectual Property Regulations: Within- and Between- Patent Competition in the US Pharmaceuticals Industry," NBER Working Papers 9303, National Bureau of Economic Research, Inc.
- Zvi Griliches & Frank R. Lichtenberg, 1984.
"R&D and Productivity Growth at the Industry Level: Is There Still a Relationship?,"
in: R&D, Patents, and Productivity, pages 465-502
National Bureau of Economic Research, Inc.
- Zvi Griliches, 1998. "R&D and Productivity Growth at the Industry Level: Is There Still a Relationship?," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 213-240 National Bureau of Economic Research, Inc.
- Lichtenberg, Frank R, 1996. "Do (More and Better) Drugs Keep People Out of Hospitals?," American Economic Review, American Economic Association, vol. 86(2), pages 384-388, May.
- Hulten, Charles R, 1992. "Growth Accounting When Technical Change Is Embodied in Capital," American Economic Review, American Economic Association, vol. 82(4), pages 964-980, September.
- Bahk, Byong-Hong & Gort, Michael, 1993. "Decomposing Learning by Doing in New Plants," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 561-583, August.
- repec:umd:umdeco:sakellaris0002 is not listed on IDEAS
- Plutarchos Sakellaris & Daniel J. Wilson, 2001.
"The production-side approach to estimating embodied technological change,"
Finance and Economics Discussion Series
2001-20, Board of Governors of the Federal Reserve System (U.S.).
- Plutarchos Sakellaris & Dan Wilson, 2000. "The Production-Side Approach to Estimating Embodied Technological Change," Electronic Working Papers 00-002, University of Maryland, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:9139. 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: ()
If references are entirely missing, you can add them using this form.