The determinants of Canadian provincial health expenditures : evidence from dynamic panel
This thesis aims to reveal the magnitude of the income elasticity of health expenditure and the impact of non-income determinants of health expenditures in the Canadian Provinces. Health can be seen as a luxury good if the income elasticity exceeds unity and as a necessity good if the income elasticity is below unity. The motivation behind the analysis of the determinants of health spending is to identify the forces that drive the persistent increase in health expenditures in Canada and to explain the disparities in provincial health expenditures, thereby to prescribe sustainable macroeconomic policies regarding health spending. Panel data on real per capita GDP, relative price of health care, the share of publicly funded health expenditure, the share of senior population and life expectancy at birth have been used to investigate the determinants of Canadian real per capita provincial total, private and government health expenditures for the period 1975-2002. Dynamic models of health expenditure are analyzed via Generalized Instrumental Variables and Generalized Method of Moments techniques. Evidence confirms that health is far from being a luxury for Canada and government health expenditures are constrained by the relative prices. Results also cast doubt upon the power of quantitative analysis in explaining the increasing health expenditures.
income elasticity, dynamic panel estimation, health expenditures
Master of Arts (M.A.)