Individual Investments in Education and Health: Policy Responses and Interactions

56 Pages Posted: 1 Dec 2016

See all articles by Jared C. Carbone

Jared C. Carbone

Colorado School of Mines

Snorre Kverndokk

Ragnar Frisch Centre for Economic Research

Date Written: November 2, 2016

Abstract

Empirical studies show that years of schooling are positively correlated with good health. The implication may go from education to health, from health to education, or from factors that influence both variables. We formalize a model that determines an individual’s demand for knowledge and health based on the causal effects, and study the impacts on the individual’s decisions of policy instruments such as subsidies on medical care, subsidizing schooling, income tax reduction, lump sum transfers and improving health at young age. Our results indicate that income redistribution policies may be the best instrument to improve welfare, while a medical care subsidy is the best instrument for longevity. Subsidies to medical care or education would require large imperfections in these markets to be more welfare improving than distributional policies.

Keywords: demand for health, demand for education, human capital, numerical modeling, causality

JEL Classification: C610, D910, I120, I210

Suggested Citation

Carbone, Jared C. and Kverndokk, Snorre, Individual Investments in Education and Health: Policy Responses and Interactions (November 2, 2016). CESifo Working Paper Series No. 6154, Available at SSRN: https://ssrn.com/abstract=2877656 or http://dx.doi.org/10.2139/ssrn.2877656

Jared C. Carbone

Colorado School of Mines ( email )

1500 Illinois Street
Golden, CO 80401
United States

HOME PAGE: http://www.mines.edu/~jcarbone

Snorre Kverndokk (Contact Author)

Ragnar Frisch Centre for Economic Research ( email )

Gaustadalleen 21
N-0349 Oslo
Norway
+47 22958811 (Phone)
+47 22958825 (Fax)

HOME PAGE: http://www.frisch.uio.no/cv/snorrek_eng.html

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