Labor Health and Economic Growth in Iran

Reaching to high economic growth has always been a concern for economic policy makers in developing countries including Iran. Since labor productivity is one of the most important sources of economic growth, policies are targeted to boost labor productivity in most countries. For realization of this aim, there is a special consideration to health improvement policies because health is one of the forms of human capital. Modern literature of economic development contend that healthy people is an index for development of a society therefore. Considering the real business cycle approach and using the covariance analysis with Johansen cointegration regression and hypothesis testing, it is tried to study the effect of labor health- that is measured by the fraction of the population over 65 aged to the population of the whole of nation- on economic growth- that is measured by GDP per capita- in Iran. The theoretical discussions suggest that labor health directly- by acting as an input in production function- and indirectly- by affecting some factors such as productivity, education, physical capital, depreciation of human capital, skill and labor supply- increases output. The empirical evidence also support this relation and show that labor health has been positive relation to the GDP per capita in Iran in 1353-85. Since labor health improvement is important for economic growth, the provision of health facilities is noticeable for labor. Health insurance, clinical centers and so on are suchlike facilities. Providing these can be made by government or private sector.