Estimating Health Production Function for the South Asian Countries

Istihak Rayhan^1, , Rakibul Hasan¹ and Mahfuja Akter²

¹Department of Economics, Bangabandhu Sheikh Mujibur Rahman Science and Technology University, Bangladesh

²Bangabandhu Sheikh Mujibur Rahman Science and Technology University, Bangladesh

Cite this paper:
Istihak Rayhan, Rakibul Hasan and Mahfuja Akter. Estimating Health Production Function for the South Asian Countries. International Journal of Econometrics and Financial Management. 2019; 7(1):12-19. doi: 10.12691/ijefm-7-1-2

Abstract

The aim of this study is to estimate the health production function for the south Asian countries. The health production function expresses the functional relationship between health status and health care inputs, while life expectancy at birth has been widely used as an indicator of population health status of a country and health care inputs can be categorized into three broader categories named economic factors, social factors and environmental factors. It is a prior work to estimate health production function for the south Asian countries. A balanced panel data of seven South Asian countries are taken for the period of 1995-2015 from World Development Indicator 2017. Breusch-Pagan, Honda, King-Wu, Standardized Honda and Standardized King-Wu Lagrange Multiplier test are used to test the random effects on pooled OLS model. Hausman test is used to select the appropriate model between fixed effect and random effect model. Breusch-Pagan LM, Pesaran LM and Baltagi, Kao and Feng bias corrected scaled test are performed to check the cross-sectional dependence of the residuals. Panel Corrected Standard Error (PCSE) model has been used to deal with contemporaneous correlation in residuals. In this study health expenditure per capita and food production index are used as economic factors, education and access to improved water facilities are used as social factors and urbanization is used environmental factors. Empirical results reveal that health expenditure per capita, education, access to improved water sources and urbanization have statistical significant positive impact on life expectancy, but the impact of food production index is found statistically significantly negative in the south Asian countries. The findings of this study help the policy makers to take a suitable policy for extending life expectancy in the South Asian countries.

Keywords:
health production function South Asian countries life expectancy Panel Corrected Standard Error (PCSE) model

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