Do gender gaps in education and health affect economic growth? A cross-country study from 1975 to 2010

We use system-generalized method-of-moments to estimate the effect of gender-specific human capital on economic growth in a cross-country panel of 127 countries between 1975 and 2010. There are several benefits of using this methodology. First, a dynamic lagged dependent econometric model is suitable to address persistence in per capita output. Second, the generalized method-of-moments estimator uses dynamic properties of the data to generate appropriate instrumental variables to address joint endogeneity of the explanatory variables. Third, we allow the measurement error to include unobserved country-specific effect and random noise. We include two gender-disaggregated measures of human capital-education and health. We find that gender gap in health plays a critical role in explaining economic growth in developing countries. Our results provide aggregate evidence that returns to investments in health systematically differ across gender and between low-income and high-income countries.