The impact of health sector on R&D, economic growth and wages

ABSTRACT

We extend the existing R&D growth literature by focusing on the short-, medium-, long-run effects of the health sector on R&D intensity, economic growth and wages, and by considering 21 OECD countries between 1991 and 2008. We show that: (i) there is a unique and stable steady state; (ii) an increase in health-labour share in skilled population has no effect on growth, but affects negatively (positively) the R&D intensity (the skill premium); (iii) Anglo–Saxons countries have the lowest health-labour share in skilled-labour population, and Nordic countries have the lowest skill premium and the highest consumption/production of healthcare per capita.

KEYWORDS:

• R&D
• health
• endogenous economic growth
• wage inequality

JEL CLASSIFICATION:

• O31
• O41
• J31
• I10

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ That is, between the starting year of available OECD data and the year when, for the most cases, the financial and economic crisis started.

² The skill premium is measured by the ratio of ninth-to-first earnings deciles.