The Effect of the Government Health Expenditures on Mortality Rate.

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CENTRAL EUROPEAN UNIVERSITY

THE EFFECT OF THE GOVERNMENT HEALTH EXPENDITURES ON
MORTALITY RATE.

Submitted to: Dr. Peter Mihalyi
Submitted by: Narmina Rustamova

Abstract.
In this paper I analyze the impact of the government healthcare expenditures, as a percentage of gross domestic product, on mortality rate per 1000 population in the age group of 15-60. In order to make the estimation results more specific I add the employment rate of females to the initial regression. The estimation is realized using cross sectional data and applying Ordinary Least Squares method. According my estimations there is a statistically significant negative impact of the government expenditures, at the same time there is a positive impact of the employment rate among women on mortality rate, which is statistically significant as well.

Budapest 2009

I. Introduction.
The question of healthcare became one of the most actual issues in our daily life for the last few years. In order to increase the health statistics government of the different countries prepare various plans and spend certain amount of money to realize their plans. Do these spendings have any significant effect on the health care? In order to answer this question I run a regression of the government healthcare spendings on the mortality rate. Small amount of the government spendings evolves poor healthcare provision; hence variable describing government healthcare spending can be applied to determine the influence of the healthcare programs on the mortality rate.

During estimation process I use cross sectional data, Ordinary Least Squares (OLS) method and assume that all OLS assumptions hold (see Wooldridge, 2002).
The outline of the paper will be as following. In part 2, I give brief description of the variables. In part 3, I run the regression designed to estimate the impact of the spending in the healthcare sphere on the mortality rate. In part 4, I describe the results of the estimation and give some explanations to them. Finally, in the conclusion I summarize the obtained results. II. Data description.

During estimation process I use the following variables:
* variable “mr” describing the mortality rate per 1000 population in the age group 15-60 including both males and females * variable “gexp” describing total expenditures on health as percentage of the gross domestic product. * Variable “emp” describing the rate of the females’ employment in percentage. In Table 1 brief information about variables, their minimums, maximum, means and standard deviations is provided. According this information in average 5.10% of the gross domestic product is spent on health care. Furthermore, it is shown that the average death rate is 204 per 1000 people. Finally, data assesses that females’ employment rate is 46.3% in average.

Table 1. The description of the variables.
Variable| Min| Max| Mean | St.Dev| Description|
Mr| 72| 504| 204| 115| Mortality rate per 1000 population| Gexp| 1.1| 13.2| 5.10| 2.10| government expenditures | Emp| 12.3| 77| 46.3| 13| Employment of the population ratio of women|

In my paper I use the data from the Union Nations database describing the mortality rate, government spending on healthcare and employment rate of females for the 111 countries for the 2000 year. III. Model estimation.

To determine how the government spendings influence mortality rate I regress variable “mr” on “gexp”. Assuming all OLS assumptions hold I estimate the following model mr = α0 + α1*gexp + υ (1) Furthermore, in order to make the model more specific I add the variable describing the employment rate of the females and obtain the following regression model mr = α0 + α1*gexp + α2*emp + υ (2)

In this regression α0 is a constant term, α1 and α2 are the coefficients describing the...
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