Impacts of Health Condition on Economic Growth in the 1990s: An Analysis for the Brazilian States

Kenya V. Noronha, Northwestern University
Lízia Figueirêdo, Pontifícia Universidade Católica de Minas Gerais
Monica V. Andrade, Centro de Desenvolvimento e Planejamento Regional (CEDEPLAR)

This paper aims to test the relationship between health and economic growth. Two main causalities were discussed: if health would directly increase labor productivity or if it would, indirectly, intensify the positive effect of education on growth. We run two basic specifications: the first one includes the proxy for health together with traditional variables usually discussed in the economic growth literature; the second one includes interaction term to capture the indirect effect of health through education. We used as proxy health status infant mortality rate and proportion of deaths by vascular diseases, diabetes, cancer, transmissible illnesses, AIDS, homicides and badly-defined causes. Our main results indicate that health spurs growth: the better the population health conditions the higher the economic growth independently of the health measure analyzed. However, the main effect of health status on economic growth is indirect. Localities presenting higher infant mortality rates tended to show lower educational returns.