Working Paper: NBER ID: w14449
Authors: Quamrul H. Ashraf; Ashley Lester; David N. Weil
Abstract: We assess quantitatively the effect of exogenous health improvements on output per capita. Our simulation model allows for a direct effect of health on worker productivity, as well as indirect effects that run through schooling, the size and age-structure of the population, capital accumulation, and crowding of fixed natural resources. The model is parameterized using a combination of microeconomic estimates, data on demographics, disease burdens, and natural resource income in developing countries, and standard components of quantitative macroeconomic theory. We consider both changes in general health, proxied by improvements in life expectancy, and changes in the prevalence of two particular diseases: malaria and tuberculosis. We find that the effects of health improvements on income per capita are substantially lower than those that are often quoted by policy-makers, and may not emerge at all for three decades or more after the initial improvement in health. The results suggest that proponents of efforts to improve health in developing countries should rely on humanitarian rather than economic arguments.
Keywords: health; GDP; economic growth; disease eradication; life expectancy
JEL Codes: I10; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Health Improvements (I19) | GDP per capita (O49) |
| Health Improvements (I19) | Worker Productivity (J29) |
| Health Improvements (I19) | Population Size and Age Structure (J11) |
| Health Improvements (I19) | Capital Accumulation (E22) |
| Health Improvements (I19) | Resource Crowding (Q34) |
| Eradication of Diseases (I15) | GDP per capita (O49) |
| Population Growth (J11) | Income per capita (D31) |
| Higher Dependency Ratio (J19) | Income per capita (D31) |