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This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period . In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both crosssection dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through fixed effects in a panel homogeneous model and through a panel heterogeneous model. Our findings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.Key Words: Health expenditure, income elasticity, cross section dependence, heterogeneous panels, factor models. Abstract This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period . In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both cross-section dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through …xed e¤ects in a panel homogeneous model and through a panel heterogeneous model. Our …ndings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.JEL Classi…cation: C31, C33, H51

This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period . In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both crosssection dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through fixed effects in a panel homogeneous model and through a panel heterogeneous model. Our findings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.Key Words: Health expenditure, income elasticity, cross section dependence, heterogeneous panels, factor models. Abstract This paper reconsiders the long-run economic relationship between health care expenditure and income using a panel of 20 OECD countries observed over the period . In particular, the paper studies the non-stationarity and cointegration properties between health care spending and income. This is done in a panel data context controlling for both cross-section dependence and unobserved heterogeneity. Cross-section dependence is modelled through a common factor model and through spatial dependence. Heterogeneity is handled through …xed e¤ects in a panel homogeneous model and through a panel heterogeneous model. Our …ndings suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in previous studies.JEL Classi…cation: C31, C33, H51

This paper investigates the long-run economic relationship between health care expenditure and income in the US at a State level. Using a panel of 49 US States followed over the period 1980-2004, we study the non-stationarity and cointegration between health spending and income, ultimately measuring income elasticity of health care. The tests we adopt allow us to explicitly control for cross-section dependence and unobserved heterogeneity. Speci…cally, in our regression equations we assume that the error is the sum of a multifactor structure and a spatial autoregressive process, which capture global shocks and local spill overs in health expenditure. Our results suggest that health care is a necessity rather than a luxury, with an elasticity much smaller than that estimated in other US studies. Further, we observe a signi…cant spatial spill over, though with a smaller intensity than that detected in other studies on spatial concentration of US health spending. Our broad perspective of cross section dependence as well as the methods used to capture it give new insights on the debate over the relationship between health spending and income.JEL Classi…cation: C31, C33, H51

Although there has been a sizeable empirical literature measuring the effect of job precariousness on the mental health of workers the debate is still open, and understanding the true nature of such relationship has important policy implications. In this paper, we investigate the impact of precarious employment on mental health using a unique, very large data set that matches information on job contracts for over 2.7 million employees in Italy followed over the years 2007-2011, with their psychotropic medication prescription. We examine the causal effects of temporary contracts, their duration and the number of contract changes during the year on the probability of having one or more prescriptions for medication to treat mental health problems. To this end, we estimate a dynamic Probit model, and deal with the potential endogeneity of regressors by adopting an instrumental variables approach. As instruments, we use firm-level probabilities of being a temporary worker as well as other firm-level variables that do not depend on the mental illness status of the workers. Our results show that the probability of psychotropic medication prescription is higher for workers under temporary job contracts. More days of work under temporary contract as well as frequent changes in temporary contract significantly increase the probability of developing mental health problems that need to be medically treated. We also find that moving from permanent to temporary employment increases mental illness; symmetrically, although with a smaller effect in absolute value, moving from temporary to permanent employment tends to reduce it. Policy interventions aimed at increasing the flexibility of the labour market through an increase of temporary contracts should also take into account the social and economic cost of these reforms, in terms of psychological wellbeing of employees.

Summary.  We study the influence of social interaction on patients’ choice of hospital and its relationship with the quality that is delivered by hospitals, using Italian data. We explore the effect on individual choices of a set of variables such as travel distance and individual‐ and hospital‐specific characteristics, as well as a variable capturing the effect of the neighbourhood. The richness of our data allows us to disentangle the influence of sharing information (the network) on patients’ choices of hospital from contextual effects. Our empirical investigation suggests that past experience in the utilization of health services by the network plays a significant role in explaining current patients’ choices of hospital. Other relevant factors that influence patients’ decisions of being admitted in a particular hospital are prior use of health services in that hospital, patient‐to‐hospital distance and supply factors such as the number of beds and number of doctors. We then investigate the relationship between a set of health outcome indicators and the sensitivity of patients’ choices to the network, to test whether sharing information increases the likelihood of selecting a high quality hospital. Our results suggest that social interaction does not have an influence on health outcomes, and in some cases it may even mislead patients, who end up in low quality institutions. One explanation for this result is the absence of a source of information on the quality of hospitals that is accessible to all individuals, such as guidelines or star ratings, which may exacerbate the influence of information that is gathered locally on choices of hospital and may result in a lower degree of competition between hospitals and lower quality.

This paper investigates the long-run economic relationship between health care expenditure and income in the world using data on 167 countries over the period 1995-2012, collected from the World Bank data set. The analysis is carried using panel data methods that allow one to account for unobserved heterogeneity, temporal persistence, and crosssection dependence in the form of either a common factor model or a spatial process. We estimate a global measure of income elasticity using all countries in the sample, and for sub-groups of countries, depending on their geo-political area and income. Our findings suggest that at the global level, health care is a necessity rather than a luxury. However, results vary greatly depending on the sub-sample analysed. Our findings seem to suggest that size of income elasticity depends on the position of different countries in the global income distribution, with poorer countries showing higher elasticity.

In this paper we review and compare diagnostic tests of cross-section independence in the disturbances of panel regression models. We examine tests based on the sample pairwise correlation coefficient or on its transformations, and tests based on the theory of spacings. The ultimate goal is to shed some light on the appropriate use of existing diagnostic tests for cross-equation error correlation. Our discussion is supported by means of a set of Monte Carlo experiments and a small empirical study on health. Results show that tests based on the average of pairwise correlation coefficients work well when the alternative hypothesis is a factor model with non-zero mean loadings. Tests based on spacings are powerful in identifying various forms of strong cross-section dependence, but have low power when they are used to capture spatial correlation.