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Health as Factor of Economic Growth: the Estonian Case


  • Helje Kaldaru

    () (Department of Economics, University of Tartu)

  • Kaie Kerem

    () (Department of Economics at Tallinn University of Technology)

  • Andres Vırk

    () (Department of Economics, University of Tartu)


The aim of the paper is to analyze the relationship between health and economic growth in Estonia. Health determines the quality of the human capital, which modern economic theories consider the principal factor of economic growth. On the basis of survey data we estimate the effect of self-assessed health on labor supply and wages applying econometric methods. We find that poor health is significantly related to lower wages and employment probability. We also calculate average days and hours lost from work due to ill health or injury in 2001. The plausible direct loss in GDP due to health problems is about 1-2 per cent. We conclude that although health has had overall a marginal effect on economic growth during the transition period, it is still important and its impact may increase in the future, when the populationís health capital deteriorates further as a result of the population getting older and young generations having damaging health behavior.

Suggested Citation

  • Helje Kaldaru & Kaie Kerem & Andres Vırk, 2004. "Health as Factor of Economic Growth: the Estonian Case," Working Papers 110, Tallinn School of Economics and Business Administration, Tallinn University of Technology.
  • Handle: RePEc:ttu:wpaper:110 Note: This research was conducted with support from the Estonian Science Foundation (Research Grants 5369 and 5083).

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    References listed on IDEAS

    1. Alok Bhargava & Dean T. Jamison & Lawrence J. Lau & Christopher J. L. Murray, 2006. "Modeling the effects of health on economic growth," World Scientific Book Chapters,in: Econometrics, Statistics And Computational Approaches In Food And Health Sciences, chapter 20, pages 269-286 World Scientific Publishing Co. Pte. Ltd..
    2. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "The Effect of Health on Economic Growth: Theory and Evidence," NBER Working Papers 8587, National Bureau of Economic Research, Inc.
    3. Nauro F. Campos & Abrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 793-836, September.
    4. Barbara L. Wolfe, 1999. "Poverty, children's health, and health care utilization," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 9-21.
    5. Kevin Thurm, 1999. "Public health and the public agenda," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 43-47.
    6. Arline T. Geronimus, 1999. "Economic inequality and social differentials in mortality," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 23-36.
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    More about this item


    health; economic growth;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies


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