Can Baumol's model of unbalanced growth contribute to explaining the secular rise in health care expenditure? An alternative test

  title={Can Baumol's model of unbalanced growth contribute to explaining the secular rise in health care expenditure? An alternative test},
  author={Jochen Hartwig},
  journal={Applied Economics},
  pages={173 - 184}
  • Jochen Hartwig
  • Published 1 November 2007
  • Economics, Medicine
  • Applied Economics
In a recent paper, I argued that Baumol's model of ‘unbalanced growth’ offers a ready explanation for the observed secular rise in Health Care Expenditure (HCE) in rich countries. Baumol's model implies that HCE is driven by wage increases in excess of productivity growth. I tested this hypothesis empirically, using data from a panel of 19 Organization for Economic Cooperation and Development (OECD) countries and found robust evidence in favour of Baumol's theory. An alternative way to test… 

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