Walter Nonneman

A further augmentation of the Solow model and the empirics of economic growth for OECD countries

Mankiw, Romer, and Weil [1992] showed that the augmented Solow model, including accumulation of human as well as physical capital, provides a good description of cross-country data, with the exception of the OECD subsample. The textbook Solow model explains about 60 percent of the cross-country variation in per worker GDP in a comprehensive sample of 98 nonoil-producing countries. By including human capital, the augmented Solow model accounts for almost 80 percent of the variation in this sample. For the OECD subsample, explanatory power of the models is rather poor. The textbook Solow model explains very little of the variation in per capita income levels (less than 6 percent). The performance of the Mankiw-Romer-Weil [1992] human capital augmented model is somewhat better but still less than 30 percent. Differences in explanatory power between samples largely disappear in specifications that allow for departures from the steady state. Mankiw, Romer, and Weil interpret this finding by conjecturing that OECD countries are perhaps farther from their steady-state levels than countries in the broader sample. The difference in explanatory power of the augmented Solow model in a broader sample versus the OECD sample is possibly due to the similarity of the OECD countries and the limited variation in explanatory variables. An alternative explanation offered here is that not all relevant factors of production are included. We therefore suggest a further augmentation of the Solow model by explicitly including the (endogenous) accumulation of technological know-how.

The role of the sickness funds in the Belgian health care market

This article reviews some of the salient features of the Belgian health care finance and delivery system. Special attention is paid to the role played by the third-party payers, i.e. the Health Insurance Associations (HIAs) in administering the compulsory national health insurance program. It is shown how, despite extensive government regulation, the markets for GP, specialist and hospital services exhibit fierce competition of the non-price variety. Next, the paper considers the three problems perceived to be the most pressing ones at present: (i) the problem of raising sufficient revenues to cover the public share of health expenditures; (ii) the (related) cost containment problem; and (iii) the problem of ensuring efficiency through appropriate incentive mechanisms. Finally, two recently proposed options for reform are discussed and complemented with a third proposal based on the ideas of regulated competition. It is concluded that strengthening the role of the third-party payers remains crucial in any attempt to reshape the system to make it efficient and affordable while keeping it equitable.

Economies of scale and scope in Flemish secondary schools

This study estimates a multiproduct translog cost function for the entire population of 1011 Flemish secondary schools in order to determine the degree of ray and product specific (dis)economies of scale as well as the degree of (dis)economies of scope. Three types of schools and seven major study fields can be distinguished. Student loads in these study fields are used as outputs produced by the schools. Evidence is found for ray economies of scale for the three types of schools, even at output levels of 300% of the actual means. Although the cost elasticities of six out of seven outputs are close to zero, most of the values indicating the degree of product specific economies of scale are negative (suggesting diseconomies of scale). However, this can be explained by the considerable scope effects which are incorporated in the definition of the product specific economies of scale.

Patient classification and cost analysis of AIDS and HIV: the case of Belgium.

The study calculates inpatient costs generated at the University Hospital in Antwerp (Belgium) and outpatient costs generated at the Institute of Tropical Medicine or at the University Hospital of 213 seropositive patients without AIDS and of 48 AIDS patients, for the year 1991. Outpatient drug use other than Zidovudine was excluded. An HIV + patient has an average annual total billing cost of 2062 ECU, 43% of which is spent in hospital, 29% on Zidovudine and 28% for follow-up at the Institute of Tropical Medicine. The average cost of care for an AIDS patient is 5.5 times higher and amounts to 11,277 ECU--hospitalisation costs (8349 ECU) and costs of Zidovudine (2031 ECU) are much higher. Costs vary with the severity of illness. In comparison to 1987, costs decreased due to lower drug prices and reduced hospitalisations. Life time costs of a seropositive patient are estimated at about 35,000 ECU, based on cost calculations per CD4-class for a follow-up period from 1991 to 1993.

Pharmacoeconomic studies : pitfalls and problems

The literature on economic evaluation of pharmaceuticals is growing rapidly. Although there have been substantial methodologic advances, there remain serious problems and pitfalls. This presentation focuses on three aspects, i.e., use (and abuse) of evaluation studies, methodologic problems, and the quality of published studies.

Explaining differences in job retention between alien and nonalien workers after an in-company training

This study focuses on the job retention of unemployed workers, after they attended a subsidized in company training programme in Flanders. Using a new large scale dataset of the Flemish Labour Exchange, we look for differences in the probability of employment between aliens and nonaliens during the 36 months following their on the job training. We further investigate whether differences persist after controlling for several socio-economic characteristics and labour market related variables. Estimating a modified probit model we find that, on average, being an alien lowers the probability of employment after training by approximately 15%. This effect reduces to 10% when controlling for other variables. The effect of education on a trainees employment chances differs for aliens and nonaliens. Aliens have a markedly lower return on investment in education. Good language skills and a longer in company training period also increase employment probability, but more so for aliens. Other control variables do not significantly improve the explanatory power of the model. The main conclusion is that even after a tailored on the job training, aliens still lag behind nonaliens in terms of employment success.

Economic incentives in the health care industry: Implications for health policy making

On 12 and 13 September 1985, the University of Antwerp held its third international conference on ‘Health and Economics’. The organizing committee had chosen the economic incentive structure operating in health care as the central theme and invited a number of distinguished speakers from several countries to address this topic from different points of view. The main purpose was to examine the experiences abroad in order to derive conclusions for Belgian health care policy. In spite of the large diversity of health care systems and incentive structures in the various countries, some consensus did emerge on how actual outcomes in terms of efficiency and equity could be brought nearer to the desired outcomes. But before we try to formulate the most important implications for health policy makers, we will first give an overview of the papers that were presented. They are all published elsewhere in this issue.