Health Human Capital And Growth

Health human capital, unlike education human capital, is the other form of human capital. Health is not only among the basic capabilities that gives value to human life, but make a significant contribution to economic growth as well.Health human capital has played critical role for the country in the process of economic development all over the world. Societies with a shortage of health human capital tend to experience a multiplicity of severe impediments to economic progress. Conversely, several of the great "takeoffs" in economic history were supported by important breakthroughs in public health, disease control, and improved nutritional intake. These historical facts prove that health human capital promotes the economic growth of a country to a certain extent.The accumulation of health human capital mainly depends on the investment from private and public department. Both the existing theory and empirical analysis have been proving the importance of health investment for the economic growth, but none of them made a distinction between the effect of private and public health investment on growth. Therefore, the research presented very different conclusions. The way private and public health investment influent the economic growth is different, so the theory and empirical study which regard either of them as total health investment is in lack of scientific reasoning. We analyse the effect of private and public health investment on the accumulation of health human capital and economic growth in endogenous growth model, and support the conclusions with empirical analyses.The endogenous growth model includes government expenditure, health human capital and physical capital. In the model we analyse the effect of health human capital from the investment of private and public department on economic growth. The choice behavior of household for maximum utility and government for maximum social welfare form a dynamic game. We use backward induction method to establish of decentralized equilibrium and social optimal equilibrium respectively. Comparative static analyses and transitional dynamics show that private and public health investment are essential for health human capital accumulation and growth, and lack of one of them will make economic growth stop or even appear negative growth. Private health investment always generates positive effect on economic growth in developing countries, but in the developed countries, it presents inverted U-shaped relationship with growth. Private and public health investment show both substitution and complement relationship, which depend on the income level, the tax rate, the existing stock of health human capital of the country, and contribution share of infrastructure to output.In empirical analysis we adopt CHNS microscopic panel data. With fixed effects model and random effects model, we study the effect of private and public health investment on individual health status and personal income, the empirical results affirm the positive effect of the two health investment on individual health status, and the contribution of health human capital to individual income is 19.3%, which is higher than that of education human capital. Health human capital not only affect personal income directly in long-run, but also affect long-term income indirectly through education human capital and physical capital.Scholars focus on the rural resident health status in China. Therefore we also study rural sample of CHNS specifically. Results show that both private and public health investment of rural residents play very significant positive effect on their health status improvement. The effect of private health investment is higher than the one in the whole sample, and the effect of public health investment is slightly lower than the one in the whole sample, reflecting the fact that public health invest in rural areas is not enough. The contribution share of health human capital of rural residents fall to 16.8%, and the share of education human capital is also reduced. Rural sample shows that the effect of health human capital on individual income is not obvious in long-run. In addition, in order to investigate how private and public health human capital influent economic growth among the countries with different income levels and public health investment level, this paper also adopts the three representative counties'time series datum in co-integration analysis. The MLE empirical analysis shows that, private and public health investment have a positive effect on economic growth in long-run. The contribution share of private health investment to output in USA is highest, and China has highest contribution share of public health investment to output, and the share of both private and public health investment in UK are lowest among the three. Using the ECM model, we get the short-run effects of health investment in the three countries. Regardless country's income level, private health investment has a positive effect on current output, and the positive effect of public health investment on output will appear one year later. The results demonstrate that public health investment has strong potential positive effect on growth, and private health investment can obtained return more quickly.