Can Baumol's model of unbalanced growth contribute to explaining the secular rise in health care expenditure? An alternative test

In a recent paper, I argued that Baumol's model of 'unbalanced growth' offers a ready explanation for the observed secular rise in Health Care Expenditure (HCE) in rich countries. Baumol's model implies that HCE is driven by wage increases in excess of productivity growth. I tested this hypothesis empirically, using data from a panel of 19 Organization for Economic Cooperation and Development (OECD) countries and found robust evidence in favour of Baumol's theory. An alternative way to test Baumol's theory is to check whether its implication that variations in the relative price of medical care contribute significantly to explaining variations in health expenditure in the same direction has an empirical grounding. Earlier studies, although mostly not in an explicit attempt to test Baumol's theory, have occasionally rejected this hypothesis. Despite poor data quality of the available medical price indices, I perform the alternative test using data for nine OECD countries. My findings suggest that the relative price of medical care is in fact a statistically significant explanatory variable for health expenditure, thus lending support to Baumol's theory.

Real wages, inflation and labour productivity in Australia

This article presents an analysis of real wages, inflation and labour productivity interrelationships using cointegration, Granger causality and, most importantly, structural change tests. Applications of tests to Australian data over the 1965 to 2007 period corroborate the presence of a structural break in 1985 and show that a 1% increase in manufacturing sector real wages led to an increase in manufacturing sector productivity of between 0.5% and 0.8%. Comparable estimates for the effect of inflation on manufacturing sector productivity have limited statistical significance. Granger causality test results suggest that real wages and inflation both Granger cause productivity in the long run. © 2012 Taylor & Francis

Labour market developments and policy responses during and after the crisis in France

There is a large literature arguing that countries with high employment protection legislation have worst labour market performance. Yet, the overall impact of the crisis on France’s labour market was comparatively limited. To solve this puzzle, this paper makes four points. First, it shows that France’s labour market problems have not historically been about high EPL. Second, the crisis in France was not as acute as in the Euro area. Third, the costs of the crisis were concentrated on certain labour market groups. Finally, the government introduced several labour market policies in response to the crisis and labour market dualisation increased despite falling policy dualism. While deregulation seems – if anything - to have made matters worse, the government also introduced short-time work schemes, prolonged unemployment benefits, and extended active labour market policies. Overall this paper advances our understanding of labour market performance and policies in France during the crisis

The politics of in-work benefits: the case of the 'active income of solidarity' in France

In-work benefits have been introduced in a number of Bismarckian welfare regimes in a context of austerity despite being targeted at politically weak constituents and representing a deviation from prevailing welfare institutions. This article addresses this puzzle by looking at the introduction in 2008 of an in-work benefit scheme in France, the Active Income of Solidarity. The analysis reveals that this reform was the result of a crosscutting alliance between the conservative party and employers, as well as parts of the socialist party and the union movement. The alliance was possible thanks to actors' multiple interpretations of the reform. The reform was difficult to oppose given its support by experts and public opinion and because it entailed an increase in revenues for low-income workers

Innovation in hospitals: a survey of the literature

Innovation, Hospitals, Survey, O3, I1,