Publisher/Institution: National Bureau of Economic Research

Abstract: In a recent paper, Acemoglu and Johnson (2007) argue that the large increases in population health witnessed in the 20th century did not improve, and may have lowered, income levels. We argue that this result depends crucially on their assumption that initial health and income do not affect subsequent economic growth. Using their data we reject this assumption in favor of a model of conditional convergence, with income adjusting to its steady state over time. We show that, allowing for conditional convergence, exogenous improvements in health due to technical advances associated with the epidemiological transition increased income levels.