EFFECT OF PUBLIC HEALTH EXPENDITURE ON INEQUALITY IN INCOME IN NIGERIA

Abstract

This study examined the impact of Public Health Expenditure (PHE) on inequality in income in Nigeria using annual time series data from 1990 to 2022. Gini coefficient was retrieved from the World Bank database to measure inequality in income. FMOLS and CCR methods were employed to investigate the relationship between PHE and inequality in income and to examine the long run relationships between the variables. Granger causality test was also used to investigate the direction of causality between PHE and inequality in income. The findings from FMOLS and CCR analyses revealed that public health expenditure had a negative significant influence on inequality in income. This meant that an increase in public health expenditure would decrease the inequality in income. In addition, the findings revealed that GDP per capita and access to electricity had a negative significant influence on inequality in income while gross fixed capital formation had a positive significant influence on inequality in income. This meant that the benefits of such investment were not equally distributed. Foreign direct investment and inflation were statistically insignificant in the long run models. Granger causality test results revealed unidirectional causality running from inequality in income to PHE, access to electricity, and foreign direct investment. These results indicate that inequality in income is a trigger for policy actions rather than a product of short-run fiscal policy. Policy makers in Nigeria are employed to formulate policies to reduce inequality in income by spending more on health and access to electricity based on the study findings.