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Political institutions and health expenditure

Author

Listed:
  • Johannes Blum

    (Ifo Institute
    University of Munich)

  • Florian Dorn

    (Ifo Institute
    University of Munich)

  • Axel Heuer

    (KfW Group, KfW Development Bank)

Abstract

We examine how political institutions influence health expenditure by using a panel of 151 developing and developed countries for the years 2000 to 2015 and four measures of democracy. Our pooled OLS analysis shows that democracies have 20–30% higher government health expenditure relative to GDP than their autocratic counterparts. An instrumental variable approach which exploits the regional diffusion of democracy confirms the positive effect of democracy on government health expenditure. Panel fixed effects and event study models also suggest a positive within-country effect of democratization on government health expenditure within a short period after regime transition. Democratic rule, however, does not turn out to significantly influence private health expenditure compared to autocracies. We conclude that democracies may care more for their citizens and strive to decrease inequalities in the access to health care.

Suggested Citation

  • Johannes Blum & Florian Dorn & Axel Heuer, 2021. "Political institutions and health expenditure," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(2), pages 323-363, April.
    • Handle: RePEc:kap:itaxpf:v:28:y:2021:i:2:d:10.1007_s10797-020-09648-9
    DOI: 10.1007/s10797-020-09648-9
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    2. Désiré Avom & Itchoko M. M. Mwa Ndjokou & Pierre C. Tsopmo & Cherif Abdramane & Simplice A. Asongu, 2024. "Duration in Power and Happiness in the World," Working Papers of the African Governance and Development Institute. 24/033, African Governance and Development Institute..
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    More about this item

    Keywords

    Event study; Democracy; Health expenditure; Development; Instrumental variable; Panel data;
    All these keywords.

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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