Asymmetric Effects of Human Health Capital on Economic Growth in China: An Empirical Investigation Based on the NARDL Model

Abstract

Human health capital is an important factor that affects countries’ economic development. This research explores the nonlinear effect of human health capital on economic growth and assesses the asymmetry over time. We used annual data from 1978 to 2021 in China and the nonlinear autoregressive distributed lag (NARDL) model to examine the long- and short-term effects of positive and negative human health capital shocks on economic growth. Human health capital is measured by personal health expenditure (PHE), government health expenditure (GHE), and social service expenditure (SSE). A reduction of one unit in short-term private health expenditure leads to a 7.48% decrease in GDP per capita. An increase in private health expenditure leads to an increase in GDP per capita of 3.51%. The positive (βPHE+) and negative (βPHE−) coefficients of change in long-term private health expenditure are 1.31 and 3.87, respectively. A reduction in short-term government expenditure on health leads to a 10.99% decline in GDP per capita. The positive (βGHE+) and negative (βGHE−) coefficients of long-term government health expenditure are −4.33 and 1.99, respectively. A one-unit reduction in short-term social service spending leads to a 5.56 percent drop in GDP per capita, while an increase in social service expenditure leads to a 5.97 percent increase in GDP per capita. The positive (βSSE+) and negative (βSSE−) coefficients of change in long-term social service expenditure are 5.76 and 4.62, respectively. Both private health expenditure and government health expenditure have shown significant asymmetry in their long- and short-term effects on economic growth. Human health capital that is rationally distributed can effectively enhance economic growth.