Explaining the interrelations between health, education and standards of living in Portugal. A simultaneous equation approach

The aim of this paper is to analyze the links between health status, education and economic growth in Portugal. Focus is given to the achievements made in infant mortality rate which represents the most significant reduction among the OECD countries in the last decades. While this very positive performance is a direct consequence of the investments made in the health sector, it is also important to note that it is a result of other socioeconomic factors outside the health system (mainly in the education system) that have contributed significantly to an improvement of the living conditions. So, to a complete understanding of the Portuguese infant mortality decline we must consider in our analysis the potential cumulative causation effects between health, education and per capita income growth. Having this in mind, in this paper we use a three equation model to determine simultaneously the interactions between infant mortality rate, education and per capita income growth. Our empirical evidence shows that the proposed model is adequate to highlight the potential links between these core factors.