Abstract
In 2005, U.S. employers spent more than $500 billion on health insurance, an intangible investment that is an expense. I show how a firm's intangible health capital investment depends on human capital, labor productivity, and firm size. Firms mitigate depreciation in human capital by investing in health to increase the productivity of human and physical capital. Using firm-level health insurance data, I find firms that have higher labor productivity and spend more on research and development invest more in health capital. Health capital investment positively affects firm value. To identify this effect, I instrument for insurance with state mandates and the number of persons covered by insurance contracts.
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