We use data from a survey of young Kenyan adults who participated in a deworming program as children to calibrate a version of the Grossman (1972) model, in which investments in health increase future endowments of healthy time. Mean hours worked increase by 12% in the treatment group, or 1.8 more hours each week on a base of 15.2. There is also evidence that deworming generated positive externalities in work hours. Furthermore, both the direct and externality effects are even larger in our preferred subsample analysis on out-of-school youth. Gains are concentrated outside of traditional agriculture, among small business owners and those working for wages. Among wage earners no longer in school, the treatment group earned over 20% more, with manufacturing employment tripling. These results suggest health improvements may increase labor supply and facilitate structural transformation. A calibration of the model combining data on the impacts of deworming and the price responsiveness of deworming take-up suggests that fully subsidizing deworming yields greater welfare than partial subsidies or laissez-faire. From the point of view of a public policymaker, deworming also appears to pay for itself by generating more in future government revenue than it costs.
March 01, 2011