The impact of health on growth: from the perspective of economic structure evolution

The impact of population health on economic growth has been widely discussed, but the extent of its influence remains inconclusive. One possible reason is the heterogeneity of health's impact on economic growth across different stages of economic development. This paper, from the perspective of changes in economic structure, attempts to study the long-term and marginal effects of health on economic growth.

By deriving from the Cobb-Douglas production function, this study constructs an empirical model to analyze the impact of health on economic growth, considering economic structure. Instrumental variable methods are employed to address potential endogeneity issues. Panel data at the country level are constructed using data from the World Bank database, Penn World Tables, and the World Health Organization, covering the period from 1980 to 2015.

It reveals a positive long-term relationship between health and economic growth, particularly in post-demographic transition nations. The marginal impact of health on economic growth varies depending on the economic structure, the economic benefit of health promotion is notably pronounced in countries with a larger share of the primary sector. As countries reach higher levels of economic development, the marginal effect of health tends to decrease. Furthermore, health changes affect labor force distribution across industries, with varying impacts.

The findings suggest that developing nations, having undergone demographic transition, experience greater returns on health investments compared to developed counterparts. This research offers novel insights into the diverse effects of health on economic growth, emphasizing the importance of economic structure in understanding these dynamics.