Tanguy Le Fur
Océane Piétri : oceane.pietri[at]univ-amu.fr
Morgan Raux : morgan.raux[at]univ-amu.fr
Laura Sénécal : laura.senecal[at]univ-amu.fr
During the first half of the 19th century, the Industrial Revolution was marked by an episode of both deterioration of population health and « deskilling » — loss of workers’ skills due to unskillbiased technical change. In this paper, I study the provision of public health over the course of development and its interaction with the direction of technological progress. I show that, when taxes to fund public health investments are chosen so as to maximize output, technological progress is first unskill-biased, the share of unskilled workers increases and as a result, population health deteriorates in the first stage of development. The economy may switch to a regime with positive health investments that provides incentives for workers to accumulate human capital and eventually change the direction of technical progress, or get stuck in a poor health—low skill steady state in the long run.