Does the Health Care Kuznets Curve Exist? Evidence from China, 1949-2010

The geographic maldistribution of health care resources is one of the most persistent characteristics of health care systems around the world. The purpose of this paper is to empirically investigate whether rapid economic growth has contributed to ameliorating the disparity in health care resources across regions within a country. We use the dynamic convergence model that controls for unobserved provincial heterogeneity and spatial dependence to test whether the geographic distribution of health care resources is convergent or divergent in the long run, while at the same time seeking to determine the role that economic growth has played in this process. Based on provincial-level panel data for China covering the period 1949-2010, the empirical results provide much support for β-convergence in that the provinces with lower initial values for health care resources, including the densities of physicians and hospital beds, are seen to grow faster and to catch up with the provinces with higher initial stocks. In addition, we find that GDP per capita has a significant non-linear impact on the convergence rate of health care resources, thus providing support for a Kuznets curve in China's health sector. That is, the inequality in the distribution of health care resources follows an inverted "U" shape as income increases over time. An important implication of our study is that economic growth per se provides a built-in stabilizer to mitigate health inequality through the convergence of health care resources across regions in the long run.