Abstract
This thesis addresses the relationship between public health care expenditure and a variety of factors in China during the 1995-2007 period. Research of other countries has found that health care expenditure grows roughly 2% per year, which has been most commonly tied to changes in per capita income and age distribution. This thesis differentiates itself from previous research by focusing on the impact of a variety of factors, including income and age distribution, on province-level government health care expenditure in China. Controlling for a variety of specification issues, as well as the potential endogeneity of per capita income, results that mimic specifications of earlier studies find the income elasticity of health care expenditure in China falls in the inelastic range, which suggests health care is a necessity. However, we do find the results are sensitive to how panel data issues are addressed, as well as the choice of regressors and functional form of the model.