Government Health Care Financing And Workforce Productivity; Empirical Evidence From Nigeria

Project and Seminar Material for Economics

Project and Seminar Material for Economics


The study examined empirically Government Health care financing and Workforce Productivity. The variables examined were workforce growth rate as a proxy for workforce productivity, government capital, recurrent and total expenditure, GDP and the total government expenditure as a percentage of GDP. A Vector Autoregressive (VAR) model was estimated using the Nigerian annual time series data from 1980 to 2010. Results from the VAR estimate and Granger causality revealed that; government capital expenditure on health care in Nigeria had a negative effect on workforce productivity over the period of study.

Government recurrent expenditure on health care in Nigeria impacted positively on workforce productivity over the period of study although the impact was weak; government capital expenditure and government recurrent expenditure on healthcare caused workforce productivity over the period of study, meaning that changes in these form of expenditures could also account for changes in workforce productivity. The study shows that government health care financing has made a little or no positive impact on workforce productivity in Nigeria over the period of study, although a positive change in financing could lead to a positive change in workforce productivity.

Therefore, government should expedite action towards providing qualitative health infrastructures; boosting recurrent expenditure to maintain them and increase spending to finance the national health insurance scheme. This will provide conducive working environment for the workers to improve in their productivity; and ensure that productive time on thinking of how to pay for out of pocket health care is channeled towards productivity.It is also recommended that better attention should be given to health personnel‘s remuneration in order to motivate them to give their best in production which will have a positive multiplier effect on the economy.

Chapter One

General Introduction

1.1 Background of the Study

A healthy workforce is an important economic asset. Health is a core contributor to an individual‘s productivity. Improved health supports labour productivity by augmenting life expectancy, and enhancing workers’ productivity by increasing both physical and mental capacities. Sick people are unproductive and with an increased number of sick people, the number of workforce is reduced. Health financing involves the basic functions of revenue collection, pooling of resources, and purchase of interventions.

World Health Organization Commission on Macroeconomics and Health in their 2001 report made a strong economic case for investing in health, which they said, will increase workforce productivity and eventually economic growth (WHO, 2001).

It is in view of the above that financing health is significant to making health charged with the task of strengthening workforce for increased productivity. Financing Health in Nigeria is from a variety of sources that include budgetary allocations from Government at all levels (Federal, States and Local). The Federal Government’s role is mostly limited to coordinating the affairs of the universityteaching hospitals, the State Government manages the various general hospitals while the Local Government focuses on health centers anddispensaries (Vogel, 1993). Loans, grants, private sector contributions, donor contributions – bilateral, multilateral, NGOs, and out of pocket expenses form the other part of health financing (Public Expenditure Review, 2009).

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