Income Variation and Health Expenditure: Evidence for OECD Countries

The purpose of this paper is to analyze the role health investment plays in human capital accumulation, and in so doing to demonstrate that education is not the only factor affecting the performance of the labor force and productivity. Estimates are made for the OECD countries for the period 1960–90. Investment in health contributes in a significant way to explaining variations in output through human capital, even in those countries which presumably have high levels of health.