“Estimating Interdependence between Health and Education in a Dynamic Model” by Guan GONG
Finance and Economics
University of Texas at Austin
This paper investigates to what extent, in what strength and through which mechanisms health and educational attainment are interrelated. A dynamic model of schooling, work, health expenditure and savings is developed. The structural estimation framework fully imposes the restrictions of the existing theoretical hypotheses on the correlation between health and education. The model’s estimates imply that an individual’s initial health status has a substantial influence on an individual’s educational attainment and the expected probability of survival. On average, having been unhealthy before the age of 21 decreases the years of education attained by 1.4. Policy experiment based on the model’s estimates indicate that a health expenditure subsidy conditional on high school attendance would have a larger impact on the educational attainment than a direct college tuition subsidy.