Health Expenditures, Longevity and Growth

98 Pages Posted: 8 May 2008 Last revised: 7 Jun 2015

See all articles by Brigitte Dormont

Brigitte Dormont

Université Paris Dauphine

Joaquim Oliveira Martins

Organization for Economic Co-Operation and Development (OECD) - Statistics Directorate (STD); University Paris-Dauphine; Public Governance Directorate

Florian Pelgrin

EDHEC Business School; EDHEC Business School

Marc Suhrcke

World Health Organization - European Office for Investment & Development

Date Written: 2008

Abstract

This paper offers an integrated view of the relationships between health spending, medical innovation, health status, growth and welfare. Health spending triggers technological progress, which is a potential source of better outcomes in terms of longevity and quality of life, a direct source of growth for the bio-tech industries and an indirect source of growth through improved of human capital. The latter contributes to GDP per capita through two main channels: higher participation of the population in the labour force and higher labour productivity levels. In turn, income growth induces an increase in health expenditure, as richer countries tend to spend a higher share of their income on health. To analyse these interactions, the paper first focuses on demographic facts, disentangling the role of longevity and carrying out some 'thought experiments' on the indexation of active life on longevity. It then analyses the links between health care expenditures, technology and health status from a micro-level perspective. We investigate empirically the relation between GDP growth and health expenditures and develop a projection method to assess the size of total aggregate expenditures that could be channeled to the health sector up to 2050 for the US, Europe and Japan. We finally assess the potential impact of these health expenditures and better health status on potential growth and productivity.

Keywords: Health expenditures, ageing, longevity, Human capital, Growth

JEL Classification: H51, I11, I12, J11, J14, O40

Suggested Citation

Dormont, Brigitte and Oliveira Martins, Joaquim and Pelgrin, Florian and Suhrcke, Marc, Health Expenditures, Longevity and Growth (2008). Available at SSRN: https://ssrn.com/abstract=1130315 or http://dx.doi.org/10.2139/ssrn.1130315

Brigitte Dormont

Université Paris Dauphine ( email )

Place du Marechal de Lattre de Tassigny
75016 Paris, 75775
France

Joaquim Oliveira Martins (Contact Author)

Organization for Economic Co-Operation and Development (OECD) - Statistics Directorate (STD) ( email )

2 Rue André Pascal
75775 Paris Cedex 16
France
+33 1 45 24 88 53 (Phone)

University Paris-Dauphine ( email )

PARIS
France

Public Governance Directorate ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Florian Pelgrin

EDHEC Business School ( email )

France
Switzerland

EDHEC Business School ( email )

58 rue du Port
Lille, 59046
France

Marc Suhrcke

World Health Organization - European Office for Investment & Development ( email )

Campo Santo Stefano
San Marco 2847
30124 Venice
Italy

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