Income productivity in China: On the role of health

This study provides empirical evidence regarding the income productivity of health human capital in China. We appeal to concepts from human capital theory to support a basic model that treats health as a form of human capital in the income production process. Our model examines the economic return at the household level from the health of its individual members. We estimate this with a longitudinal sample drawn from the China Health and Nutrition Survey (CHNS), allowing us to exploit “within” variation in health and income to address possible unobservables biasing estimates of the impact of health on income in the simple cross-sectional setting. Household income is strongly influenced by the health of its members, particularly in rural areas. These findings could have important implications for health and economic policy-making aimed at reducing the long-standing urban-rural economic gap and more comprehensively insuring the rural population against health and economic risk.