Staff Reports
Health Spending Slowed Down in Spite of the Crisis
June 2016 Number 781
Revised October 2019
JEL classification: E3, G28, I11

Authors: Marco DiMaggio, Andrew Haughwout, Amir Kermani, Matthew Mazewski, and Maxim Pinkovskiy

We exploit plausibly exogenous regulatory changes in the mortgage lending market to estimate causal effects of the financial boom and bust on personal income in the health sector. We find that counties that were exogenously more exposed to the crisis because of the regulatory reforms experienced a greater rise in the size of the health sector over the course of the boom and the bust relative to control counties, with the differential persisting through the recovery. We provide suggestive evidence that increased mortality during the bust and greater capital investment during the boom contributed to this persistence of health spending.

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