Health expenditures and inequality: a political economy perspective

Gamlath, Sharmila ✉; Lahiri, Radhika

Angol nyelvű Tudományos Szakcikk (Folyóiratcikk)
Megjelent: JOURNAL OF ECONOMIC STUDIES 0144-3585 1758-7387 46 (4) pp. 942-964 2019
  • Gazdaságtudományi Doktori Minősítő Bizottság: C
  • SJR Scopus - Economics, Econometrics and Finance (miscellaneous): Q1
    Purpose The purpose of this paper is to explore the manner in which the degree of substitutability between public and private health expenditures contributes towards the distribution of wealth and political economy outcomes in the long run. Design/methodology/approach An overlapping generations model with heterogeneous agents where a person's probability of survival into old age is determined by a variable elasticity of substitution (VES) health production function with public and private expenditures as inputs is developed. Public expenditure on health is determined through a political economy process. Findings Analytical and numerical results reveal that higher substitutability between private and public expenditures at the aggregate level and a higher share of public spending in the production of health lead to higher long run wealth levels and lower inequality. In the political equilibrium, higher aggregate substitutability between public and private health expenditures is associated with more tax revenue allocated towards public health. For most parameter combinations, the political economy and welfare maximising proportions of tax revenue allocated towards public health care converge in the long run.Originality/value This paper adopts an innovative approach to exploring this issue of substitutability in health expenditures by introducing a VES health production function. In an environment where agents have heterogeneous wealth endowments, this specification enables a distinction to be made between substitutability of these expenditures at the aggregate and individual levels, which introduces a rich set of dynamics that feeds into long run outcomes and political economy results.
    Hivatkozás stílusok: IEEEACMAPAChicagoHarvardCSLMásolásNyomtatás
    2021-05-06 00:39