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Firm Investment in Human Health Capital

41 Pages Posted: 9 Sep 2010 Last revised: 11 Aug 2017

Sara B. Holland

University of Georgia - C. Herman and Mary Virginia Terry College of Business

Date Written: August 2, 2017

Abstract

In 2005, U.S. employers spent more than $500 billion on health insurance. I argue that firms invest in worker health to mitigate the depreciation in human capital that occurs when workers get sick, which increases the productivity of human and physical capital. Using firm-level health insurance data, I find firms that have higher labor productivity, spend more on research and development, and are larger invest more in health capital.Further, health capital investment positively affects firm value and overall productivity. To identify this effect, I instrument for insurance with state mandates and the number of persons covered by insurance contracts.

Keywords: Human capital, health insurance, intangibles, investment, market valuation

Suggested Citation

Holland, Sara B., Firm Investment in Human Health Capital (August 2, 2017). Available at SSRN: https://ssrn.com/abstract=1674508 or http://dx.doi.org/10.2139/ssrn.1674508

Sara B. Holland (Contact Author)

University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )

Brooks Hall
Athens, GA 30602-6254
United States

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