Investigating Interactions among Health Care Indicators, Income Inequality and Economic Growth: A Case Study of Iran

Life expectancy and infant mortality are of the major indicators for assessing the efficiency of every social health systems. Bulk of literature on health economics is related to the unilateral influences of macroeconomic variables on health sector indices and less attention has been paid to bilateral and simultaneous effects. Therefore, present paper aims to examine the bilateral and simultaneous impacts of the key macroeconomic variables on life expectancy and infant mortality in Iran during 1981-2018. To this aim, a system of simultaneous equations based on variables of life expectancy, infant mortality and economic growth by considering the government health care expenditures and Gini coefficient is developed. Findings indicated that income growth per capita positively affects the growth of life expectancy index by 31%, but growth of social-class differences or income inequality has a negative effect on this index. Moreover, escalation of health care budget in Iran has led to infant mortality rate slumping by 81%. It highlights the significant role of government, parliament and legislature in approving and improving the Ministry of Health budget and facilitating achievement of higher social-health standards. Finally, the outcomes reflected the simultaneous and positive effect of improving growth of life expectancy and reverse effect of infant mortality growth indices on the economic growth of Iran. The findings of current study provide evidence on the bilateral relationship between enhancing the macroeconomic conditions and improving the health economy indicators and existence of a reinforcing loop between them. Finally, the outcomes reflected the simultaneous and positive effect of improving growth of life expectancy and reverse effect of infant mortality growth indices on the economic growth of Iran. The findings of current study provide evidence on the bilateral relationship between enhancing the macroeconomic conditions and improving the health economy indicators and existence of a reinforcing loop between them.