The Relationship between Health and Growth: When Lucas Meets Nelson-Phelps

25 Pages Posted: 15 Mar 2010 Last revised: 17 Sep 2010

See all articles by Philippe Aghion

Philippe Aghion

College de France and London School of Economics and Political Science, Fellow; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Peter Howitt

Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Fabrice Murtin

Stanford University; London School of Economics & Political Science (LSE)

Date Written: March 2010

Abstract

This paper revisits the relationship between health and growth in light of modern endogenous growth theory. We propose a unified framework that encompasses the growth effects of both the rate of improvement of health and the level of health. Based on cross-country regressions over the period 1960-2000, where we instrument for both variables, we find that a higher initial level and a higher rate of improvement in life expectancy both have a significantly positive impact on per capita GDP growth. Then, restricting attention to OECD countries, we find supportive evidence that only the reduction in mortality below age forty generates productivity gains, which in turn may explain why the positive correlation between health and growth in cross-OECD country regressions appears to have weakened since 1960.

Suggested Citation

Aghion, Philippe and Howitt, Peter and Murtin, Fabrice, The Relationship between Health and Growth: When Lucas Meets Nelson-Phelps (March 2010). NBER Working Paper No. w15813. Available at SSRN: https://ssrn.com/abstract=1569231

Philippe Aghion (Contact Author)

College de France and London School of Economics and Political Science, Fellow ( email )

London
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Peter Howitt

Brown University - Department of Economics ( email )

Box B
Providence, RI 02912
United States
401-863-2145 (Phone)
401-863-1970 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Fabrice Murtin

Stanford University ( email )

Stanford, CA 94305
United States

London School of Economics & Political Science (LSE)

Houghton Street
London, WC2A 2AE
United Kingdom

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