A Study On The Contribution Of Healthy Human Capital To Economic Growth

The contribution of human capital on economic growth has been a consensus in the academia for years. However, most of existing research focuses on the field of education human capital, yet research on health human capital, which is another form of human capital, is ignored. With the development of social economy,people now enjoy better living standards and begin to pay attention to their own health conditions and the investment in health fields. It is followed by the effect of health on economic growth that is increasingly deepening. Some research on the relation of health human capital and economic growth from micro and macro perspective has begun to appear in academia in recent years. All these literatures have proved that health human capital plays an important role in personal income as well as a country or region’s economy, and affirmed the significance of accumulation of health human capital. The accumulation of health human capital mainly depends on the investment on health, whose investors are government and individuals. But we should note that private and public health investment effects economy in a unique way, and the effect of two kinds of investment on economic growth also can be the opposite in different stages. Therefore,health investment will be divided into two different parts in this paper,public and private health ones,and we explore the influence of the two kinds of investment on the accumulation of health human capital and economic growth in an endogenous growth model,finally support the conclusions with an empirical analysis.In the theoretical analysis,an overview of some important theories and literature on human capital, health human capital and economic growth has been presented in this part. Then in an endogenous growth model, we study the domino effect of the proportion of private and public health expenditure and tax rate on economic growth under steady state. We analyze two cases including maximization of family’s utility and social welfare. Our conclusions are that public investment has always a positive effect on economy in our country at present, and too much private health investment could squeeze out material capital investment to do harm to the development of economy. Two kinds of health investment should keep a proper proportion in order to promote our country’s economy in a fastest speed.As to the theoretical analysis, in order to get the level of contribution of private and public health investment to economic growth, we select six variables, of course government and family expenditure are included, and make use of unit root test, cointegration test, error correction model and granger causality test to analyze our country’s time series date from year 1980 to 2012. Our analysis shows that both two kinds of health investment have long-term positive effects on economic growth, and among them, public health expenditure contributes more than private ones to our economy. But their positive effects on economy both need a period of time to achieve.