Education and Health: Evidence of Threshold Effects on Economic Growth

This work analyzes the effect of education and health on economic growth using a fixed effect panel threshold model for 86 economies from 1960 to 2010. In accordance with non-linearities literature, the work verifies the existence oftwo income thresholds, after which health and education affect growth differently. Although the magnitude of the effect of health on economic growth is variable, the relationship between them is always positive. Nonetheless, education has only a positive effect on growth after the second income threshold. The intuition is that a healthier population implies a better economic performance, regardless of the development stage. Differently, a higher education should have favorable effects only from a minimal level of income compatible with a minimal physical capital.