Is health care expenditure across Europe converging? Findings from the application of a nonlinear panel unit root test

Abstract

Uneven patterns of health care expenditure are a prominent feature of late capitalist society. Across Europe, spearheaded by European Union (EU) economic integration, there continues to be debate concerning health care expenditure and, more specifically, to what extent there has been an apparent convergence or divergence. The extant literature is contradictory, inconclusive and potentially misleading, characterised as a ‘mixed bag’. Therefore, as a means of resolving some of these tensions, this paper tests the hypothesis that health care expenditure per capita has converged. Departing from a conceptual review of key factors influencing health care expenditure, this paper applies a non linear time series test to longitudinal data for 14 EU countries for the period 1970–2008. This paper fills a notable research gap by better accounting for the existence of nonlinearity in the growth dynamics of health care expenditure by utilising the nonlinear panel unit root test. Using different reference countries, we cannot reject the null hypothesis of unit root-evidence against the notion of convergence. This generates some notable policy implications and raises issues for those researching this topic.