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Empirical Essays on Human Capital Investments in Health and Education

von Anastasia Driva

Health and education have been described as the “twin pillars for assuring the wellbeing of individuals” by the former Secretary General of the United Nations, Kofi Annan (Khan, 2002). According to data from the Worldbank, OECD member-countries spend on average 12.4% and 4.9% of total GDP on health and education respectively. The figures are lower for low and middle income countries but still sizable (World Bank, 2016b). The interaction of the two is of high relevance not only for governments and policymakers but also for economists. Long-run growth theory has emphasized the instrumental role of human capital investments, a subset of which is health and education, for economic growth (Preston, 1975; Mincer, 1981; Costa and Steckel, 1997; Bloom et al., 2001).

A necessary condition for policymakers and economists to foster health and education is first to quantify the two notions and understand stylized facts and second to design policies to improve them both in the short- and in the long-term. From an empirical point of view, there has been a plethora of studies and interventions targeting improvements in health and education outcomes in developed and developing countries (Aizer, 2004; Lleras-Muney, 2005; Heckman et al., 2013; Attanasio, 2015). Yet, there is still no consensus with respect to what type of interventions work best under specific settings. To shed light on the importance of reforms and interventions in health and education, I look into three different settings in Germany, where I combine theoretical foundations with statistical tools and data to empirically investigate questions of high policy-interest that have been neglected by the literature so far.

My first chapter is a joined project with Stefan Bauernschuster and Erik Hornung, where we investigate the impact of compulsory health insurance on mortality as introduced in 1884 by Chancellor Bismarck. Using novel and unique data, we find that after the introduction of the health insurance plan, mortality for blue collar workers decreases significantly. A potential channel for this finding could be access to information with regards to hygiene passed on by doctors. In the second chapter of my dissertation (jointly with Joachim Winter and Melanie Lührmann), we look into financial literacy and gender stereotypes among teenagers. The results indicate that there is an association between financial knowledge and gender stereotypes related to household finance. Additionally, we find that males’ beliefs are more biased towards their own gender. The policy relevance of our findings lies in that they suggest possible ways to improve financial programs targeted at teenagers. Lastly, in my third chapter I study the effect of being eligible for earlier childcare entry on long-term health outcomes. Even though the findings do not hint towards a causal or significant effect, the descriptive evidence available suggests that there is a selection effect where better-off families send their children to kindergarten earlier (Cornelissen et al. 2016).

Aizer, A. (2004): “Home alone: supervision after school and child behaviours,” Journal of Public Economics, 88, 1835–1848.
Attanasio, O. P. (2015): “The Determinants of Human Capital Formation During the Early Years of Life: Theory, Measurement and Policies,” Journal of the European Economic Association, 13, 949–997.
Bloom, D. E., D. Canning, and J. Sevilla (2001): “The Effect of Health on Economic Growth: Theory and Evidence,” Working Paper 8587, National Bureau of Economic Research. Cornelissen, T., C. Dustmann, A. Raute, and U. Schoenberg (2016): “From LATE to MTE: Alternative methods for the evaluation of policy interventions,” Labour Economics, 41, 47 – 60, SOLE/EALE conference issue 2015.
Costa, D. and R. H. Steckel (1997): Long-Term Trends in Health, Welfare, and Economic Growth in the United States, University of Chicago Press, 47–90.
Heckman, J., R. Pinto, and P. Savelyev (2013): “Understanding the Mechanisms through which an Influential Early Childhood Program Boosted Adult Outcomes”, American Economic Review, 103, 2052–86.
Khan, S. (2002): “Human Development, Health and Education,” Working paper. Lleras-Muney, A. (2005): “The relationship between education and adult mortality in the United States,” The Review of Economic Studies, 72, 189–221.
Mincer, J. (1981): “Human Capital and Economic Growth,” Working Paper 803, National Bureau of Economic Research.
Preston, S. H. (1975): “The Changing Relation between Mortality and Level of Economic Development,” Population Studies, 29, 231–248.
World Bank (2016b): “The World Bank Database,” Online, Access date: August 2016

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