US health services employment: A time series analysis

The growth of health services employment in the United States is modelled using ARIMA analysis, and related to the growth in total U.S. employment. It is argued that specific features of the medical care sector (licensed professional manpower, non‐profit firms, third‐party financing) create institutional rigidities which delay adjustment to macroeconomic conditions and other shocks. Tests of Granger causality and the pattern of coefficients in the cross‐correlation function show that health services employment does lag other sectors of the economy by an average of 2 to 4 years. A Box‐Jenkins transfer‐noise function model between total and health employment is constructed and evaluated, and the impact dynamics of adjustment to Medicare and Medicaid are estimated.