Education and Health in an Effective‐Labour Empirical Growth Model*

A structural growth equation is formulated incorporating education and health as labour‐augmenting variables in an aggregate production function. Although the model is an extension of the neoclassical framework, with diminishing returns to physical capital, growth rates in output per worker need not be identical across countries, even in their steady states. Cross‐country empirical estimates suggest a strong positive relationship exists between growth and health (as proxied by life expectancy), even after allowing for possible simultaneity, consistent with other evidence on the productivity‐enhancing effects of improved health status. By contrast, the relationship between output per worker and education is not significant.