Determinants of Life Expectancy at Birth in Iran: A modified Grossman Health Production Function

Health as a prerequisite to perform other activities is considered as bothconsumption and capital commodity. Views on health production may differ.Sometimes, health is assumed as natural endowment, at times, it is generated bythe personal efforts, and sometimes physicians and other health providersprovide it. This paper aims to identify the factors affecting the production ofhealth. To analyze thedeterminants of health production, we focus on life expectancy at birth in Iranover the period 1980-2012, as a dependent variable; and take per capita income,immunization rate and share of expenditure on education( as percent of GDP) asexplanatory variables. Then, weestimate the determinants of life expectancy using Johansen-Juseliuscointegration method for the long-run and error correction model for the short-runin the Eviews.8 software environment. In the long-run, the elasticity of life expectancy with respect to per capitaincome is about 0.12. In addition, the elasticities of life expectancy withregard to the rate of vaccination against illnesses and education levelare 0.35 and 0.13, respectively. Accordingto error correction model, the coefficient of error correction term (ECT) isestimated at -0.022, which shows that the 2.2% of disequilibrium in lifeexpectancy is adjusted in each period and is approached to its long-runequilibrium. the healthier and longer life require policy-makers toadopt more efficient policies in order to raise purchasing power, to enhanceoverall education level and to invest on immunization people against infectiousand communicable diseases