Friday, August 19, 2011

[EQ] Health and Economic Development -Evidence from the Introduction of Public Health Care

Health and Economic Development
Evidence from the Introduction of Public Health Care

Anthony Strittmatter, Uwe Sunde

University of St.Gallen, and Albert-Ludwigs-University Freiburg.

University of St. Gallen, IZA Bonn, and CEPR, London.

August 2011 Discussion Paper no. 2011-32

School of Economics and Political Science - Department of Economics - University of St. Gallen

Available online PDF [56p.] at:


“…..This paper investigates the causal effect of changes in health on economic development using a long panel of European countries. Identification is based on the particular timing of the introduction of public health care systems in different countries, which is the random outcome of a political process. We document that the introduction of public health care systems had a significant immediate effect on the dynamics of infant mortality and crude death rates.

The findings suggest that a reduction in infant mortality or crude death rates exhibited a positive effect on growth in income per capita and increased population growth….”


“……This paper has applied a novel identification strategy based on the timing of the implementation of a universal public health system to estimate the causal effect of mortality changes on economic growth and population growth.

The results indicate that a reduction in mortality accelerates growth of income per capita and population size. The results reconcile earlier findings in the literature by documenting a positive effect of mortality reductions on growth based on an identification strategy that exploits within-country over-time variation, suggesting that the discrepancies in earlier findings might be the result of differences in sample composition, rather than identification method. Moreover, our results suggest that public health policy plays a potentially important role for economic development.

Naturally, there are caveats to our analysis that need to be taken into account when interpreting our results. First, the findings are based on a small sample, with the identifying variation stemming from European countries in the late 19th and early 20th Century. As in previous studies, sample composition might affect the generality and external validity of our results…………”

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