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Understanding the Relationship between Life Expectancy and Human Capital

This presentation, conducted by Ronald Murphy for Econ 339, explores the intricate relationship between life expectancy and human capital. Drawing on Casper Worm Hansen's 2013 study published in the Journal of Health Economics, it emphasizes how improvements in life expectancy contribute to enhanced human capital. The implications of this relationship have significant effects on economic growth, workforce productivity, and health policy formulation. By examining these dynamics, the study aims to provide insights into fostering sustainable development through health and education investments.

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Understanding the Relationship between Life Expectancy and Human Capital

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  1. Fall 2013: Econ 339 Final Presentation Ronald Murphy 12/3/13 Life Expectancy and Human Capital Reference: Casper Worm Hansen (2013), Life Expectancy and Human Capital, Journal of Health Economics, vol.32, issue. 6, p.1142-1152 Total:_________
  2. Purpose of Study This study examines how a large positive shock to life expectancy influenced the formation of human capital within countries during the second half of the 20th century.
  3. Hypothesis Whether country level health improvements, as measured by changes in life expectancy at birth, have a positive effect on human capital.
  4. How Data Will be Analyzed To investigate the casual effect of life expectancy on human capital, the analysis exploits a large positive shock to life expectancy, which was part of the international epidemiological transition.
  5. How Data Will be Analyzed Cont. This study relies on interaction between preintervention variation in mortality from different infectious diseases and time variation occurring from the new medical tech in the mid 20th century. Time variation uses new schooling data listed in 5 years intervals Diseases- Malaria, pneumonia, tuberculosis, influenza, cholera, smallpox, shigella, whooping cough, typhus, plague, yellow fever, scarlet fever, diphtheria, measles, and typhoid.
  6. Analysis Used for Graphs The analysis starts by studying the first-stage relationship between life expectancy and the health-shock variable coded on the basis of 15 infectious diseases proposed (Time period 1940-1980).
  7. Fig. 1 Life expectancy and the health shock. Notes : Partial correlation plot between the Δ life expectancy and the Δ health shock 15 . Base sample over 1940–1980. Casper Worm Hansen Life expectancy and human capital: Evidence from the international epidemiological transition Journal of Health Economics Volume 32, Issue 6 2013 1142 - 1152 http://dx.doi.org/10.1016/j.jhealeco.2013.09.011
  8. Fig. 2 Years of schooling and the health shock. Notes : Partial correlation plot between the Δ in Years of schooling and the Δ in Health shock 15 . Base sample over 1940–1980. Casper Worm Hansen Life expectancy and human capital: Evidence from the international epidemiological transition Journal of Health Economics Volume 32, Issue 6 2013 1142 - 1152 http://dx.doi.org/10.1016/j.jhealeco.2013.09.011
  9. The Three Big Killers One important question is whether the positive estimate on life expectancy at birth is due to health improvements in childhood or in adult life (or both). The three big killers- Malaria, pneumonia (concentrated on kids), and tuberculosis (concentrated on adults)
  10. Results Only shocks to malaria and pneumonia have statistical significant positive effects on life expectancy. But only the “pneumonia shock” is significantly related to life expectancy. Malaria has an outlier in its data (Mauritius)
  11. Concluding Remarks Healthier countries with longer-lived populations also spend more (effective) time on schooling and herby acquire better human capital skills. The analysis finds that for one extra year of life expectancy, years of schooling increase by 0.17 year, which implies that the medical advances of this period raised schooling by about 1.1 years. Thus, the bulk of evidence indicates that life expectancy has a positive effect on human capital.
  12. Concluding Remarks Cont. Due to the fact that the decline in pneumonia increases human capital signifies that early life health is an important determinant of human capital.
  13. Counties Used Countries in the base sample- Algeria, Finland, Morocco, Thailand, Argentina, France, Myanmar, Trinidad &Tobago, Australia, Germany, Netherlands, Tunisia, Austria, Greece, New Zealand, Turkey, Bangladesh, Guatemala, Nicaragua, UK, Belgium, Haiti, Norway, US, Bolivia, Honduras, Pakistan, Uruguay, Brazil, Hungary, Panama, Venezuela, Bulgaria, India, Paraguay, Vietnam, Canada, Indonesia, Peru, Yugoslavia, Chile, Iran, Philippines, China, Iraq, Poland, Colombia, Ireland, Portugal, Costa Rica, Italy, Romania, Czech Republic, Jamaica, Russia, Denmark, Japan, South Africa, Dom. Republic, Korea, Spain, Ecuador, Malaysia, Sri Lanka, Egypt, Mauritius, Sweden, El Salvador, Mexico, and Switzerland
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