Health and economic development: evidence from non-OECD countries

This paper studies the empirical relationship between population's health and real GDP dynamics in low- and middle-income countries. We employ a semi-parametric technique, which combines mixed panel data models and cluster analysis to account for unobserved heterogeneity, an important source of estimation bias in growth regressions. We estimate a version of the Solow growth model augmented with human capital, in the form of both education and health. Our estimates show that population s health, here proxied by the life expectancy at birth, has a positive, sizable, and statistically significant effect on both the level and the growth rate of the real per capita GDP.