Public Health Expenditure and Labour Productivity: A Tentative Interpretation Based on the Science of Brain Cognition

Abstract

Based on the panel data of China's prefecture-level cities in 2007-2013, this paper empirically studies the relationship between public health expenditure and labour productivity from the perspective of brain cognition, and distinguishes non-agricultural labour productivity and agricultural labour productivity. Results show that public health expenditure is conducive to improving labour productivity and plays a significant role in promoting non-agricultural labour productivity and agricultural labour productivity through improving people’s cognitive abilities. Further analysis shows that public health expenditure has a greater impact on areas with lower economic development, which may be due to differences in brain cognition. Besides public health expenditure in the eastern region is negatively correlated with agricultural labour productivity, which may indicate that excessive health investment in rural areas in the eastern region squeezes out physical capital investment; in addition, this paper finds that the lack of infrastructure may make public health expenditure cannot function properly via brain cognition.