The Role of Institutional Quality in Health Expenditure-Labour Force Participation Nexus in Africa

The study investigated the role of institutional quality in the relationship between health expenditure and labour force participation (LFP) in Africa, taking into consideration two forms of health expenditures (government health expenditure (GHE) and out-of-pocket health expenditure (OOPHE)) and gender labour force participation dichotomy. We employed data of 39 African countries for the period between 2000 and 2018 using Panel Fixed Effects with Driscoll and Kraay standard errors and two-stage System Generalised Method of Moments (GMM). The results revealed that government health expenditure yields an increasing effect on total, female, and male LFP. OOPHE, in most cases, leads to a decline in LFP. The institutional quality was found to be detrimental to LFP. The magnitude of the positive effect of government health expenditure on LFP is reduced by the interaction of institutional quality with government expenditure. In conclusion, we advocate for the improvement in institutional apparatuses across African countries. JEI CODE: E62; H51; J21; O43