American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Health Sector Structural Change
American Economic Journal: Macroeconomics
(pp. 94–133)
Abstract
The US health-services sector has grown in terms of its expenditure share and relative price. Using a two-sector general equilibrium model with monopolistic competition and endogenous population, we find that relative price growth is almost entirely attributable to increasing relative sectoral markups. Demand effects from aging play only a minor role driving up prices and expenditure shares. Controlling for GE effects and rising relative markups, we estimate that health-sector TFP has grown since the 1980s at a rate greater than 1 percent annually, dampening relative price growth while leading to higher health-sector output, partially driving up aggregate expenditure shares.Citation
Pretnar, Nick, and Maria Feldman. 2026. "Health Sector Structural Change." American Economic Journal: Macroeconomics 18 (4): 94–133. DOI: 10.1257/mac.20240013Additional Materials
JEL Classification
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- E23 Macroeconomics: Production
- H51 National Government Expenditures and Health
- I11 Analysis of Health Care Markets
- J14 Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
- L13 Oligopoly and Other Imperfect Markets