Health and Growth

Abstract

Inarguably the most important question is about the unequal distribution of income among countries. Development economists have recently turned to health for an answer. This dissertation investigates the e®ect of health on cross-country income. The first essay sheds new light on the impact of AIDS on cross-country income levels. We control for a variety of factors that are potentially related to income as suggested by our empirical model and existing related literature. Using the extended (for human capital) Solow model as our baseline empirical specification, we consider cross-sectional and panel estimation. For the full sample it is shown that AIDS has a negative and significant efect on the level of income in both the cross-sectional, and panel estimations. When we arbitrarily split our full sample into OECD and non-OECD countries, we find that the AIDS coeficient continues to be negative and significant for the non-OECD subsample. The second essay constructs gender-specific human capital inequality measures using the Gini coeffcient. It also considers a new channel through which infant mortality affects economic growth-female human capital inequality. It is inequality in education among women that affects infant mortality and the latter affects economic growth and development. We consider cross-sectional and panel data analysis and use common instruments to correct for endogeneity of infant mortality. Our analysis suggests diverting general education subsidy money directly into the education of the least educated women, especially in less-developed countries.