Does the Finnish healthcare sector show signs of Baumol's cost disease?
Gästgifvars, Kristian (2020)
Gästgifvars, Kristian
Åbo Akademi
2020
Julkaisu on tekijänoikeussäännösten alainen. Teosta voi lukea ja tulostaa henkilökohtaista käyttöä varten. Käyttö kaupallisiin tarkoituksiin on kielletty.
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2020051535792
https://urn.fi/URN:NBN:fi-fe2020051535792
Tiivistelmä
Health expenditures are growing globally and the causes are somewhat unclear. Baumol’s cost disease could potentially act as a viable explanation for rising healthcare costs. The formalisation and method constructed by Atanda, Menclova and Reed (2018) allow the estimation of two of Baumol’s (1967) original propositions of the cost disease, which are seldom tested. The models measure how the healthcare sector’s share of the labour force is affected by a) the relative productivity between health and non-health sector, and b) the total productivity in the economy. In this thesis, the method is applied to measure if the Finnish healthcare sector displays any signs of the cost disease.
The data are gathered from 70 sub-regions in Finland between 2000 and 2016. Sub-regions are by regional size between municipals and hospital districts. Primary care is provided by municipalities and specialised care is provided by hospital regions. The Finnish health system is exceptionally decentralised and the cross-regional variation is rather large.
The empirical impact of the cost disease is tested with three different fixed effects models, similar to the ones used in most of the contributions in the same field of study. The results suggest that relative and total productivity are positively related to healthcare share of the labour force, which are both anticipated theoretically as well. The effect is statistically significant but economically affects only 600-850 employees annually in the health sector, which employs around 400 000 people. Therefore, the cost disease is perhaps noticeable after a decade-long intersectoral transition in the Finnish labour market.
This thesis strengthens the results of Ministry of Finance (2013) study of the healthcare sector which suggests that Finnish healthcare is suffering from Baumol’s cost disease but decreases the economical severity of the impact.
The data are gathered from 70 sub-regions in Finland between 2000 and 2016. Sub-regions are by regional size between municipals and hospital districts. Primary care is provided by municipalities and specialised care is provided by hospital regions. The Finnish health system is exceptionally decentralised and the cross-regional variation is rather large.
The empirical impact of the cost disease is tested with three different fixed effects models, similar to the ones used in most of the contributions in the same field of study. The results suggest that relative and total productivity are positively related to healthcare share of the labour force, which are both anticipated theoretically as well. The effect is statistically significant but economically affects only 600-850 employees annually in the health sector, which employs around 400 000 people. Therefore, the cost disease is perhaps noticeable after a decade-long intersectoral transition in the Finnish labour market.
This thesis strengthens the results of Ministry of Finance (2013) study of the healthcare sector which suggests that Finnish healthcare is suffering from Baumol’s cost disease but decreases the economical severity of the impact.