World Journal of Medical Sciences 13 (2): 157-164, 2016 ISSN 1817-3055 © IDOSI Publications, 2016 DOI: 10.5829/idosi.wjms.2016.13.2.102182 Corresponding Author: Neelma Shamsi, The University of Lahore, Sargodha Campus, Pakistan. Cell: +92-3327721304, E-mail: neelma_shamsi@yahoo.com. 157 What Determine the Public Health Expenditure in Pakistan? Urbanization, Income and Unemployment Neelma Shamsi and Muhammad Waqas 1 2 The University of Lahore, Sargodha Campus, Pakistan 1 The University of Sargodha, Pakistan 2 Abstract: This study explored the determinants of public health expenditure in Pakistan by utilizing different socio-economic variables. The time series data from the period 1980 to 2009 has been used for the analysis. The results of Augmented Dickey–Fuller unit root test depicted that variables have different order of integrations. Results of OLS showed that income, primary school enrollment and urban population have positive impact on public health expenditure while unemployment rate has negative impact on public health expenditure. Key words: Pakistan Public Health Expenditures Time Series Unit Root INTRODUCTION First time Newhouse [5] found out the determinants Health is a necessity rather than a luxury for human much importance in research. Many other researchers beings [1]. A person with poor health can’t work properly and efficiently. Labor force is a significant factor of production than capital and technology [2]. Healthy workers can work for longer hours and are more productive than unhealthy workers. As a result they earn higher earnings and play an important role in the economic development of the country. A big determinant of economic growth is investment in human capital. In the case of children, poor health also has negative impact on their learning abilities and educational outcomes. Poor health decreases the efficiency of human capital [3]. That’s why increase in public health expenditure got so much importance during the recent years. If the problem of low expenditure on health care services are not solved, it will cause much more problems like human capital inefficiency, low productivity, low saving and investment (As large portion of income spent on poor health and diseases) and low school enrollment rates. Consequently economic growth of the country will be affected. The factors which affect the decisions of public health expenditure not only include environmental and biological factors, they also include demographic, economic and social factors [4]. of public health expenditure. After that this topic got so have tried to explore the determinants of public health expenditure. Those researchers are Bhat and Jain [1], Font and Novell [3], Gupta et al. [4], Siddiqui et al. [6], Govindraj et al. [7], Filmer and Pritchett [8], Ricci and Marios [9], Sekhar [10], Bhabesh and Sekhar [11], Akram and Khan [12], Rahman [13], Manzoor et al. [14], Chaabouni and Abednnadher [15], Potrafke [16], Abbas and Hiemenz [17], Yu et al. [18], Xu et al. [19], Craigwell et al. [20], Imoughele and Ismaila [21] and Yaqub et al. [22] Bhat and Jain [1] tried to explore the effect of Gross Domestic Product on public health expenditure using Indian state level data. The data was collected from 14 states of INDIA. The specific objectives of this study were to explore that public health spending is a necessity or a luxury good. To find out the impact of income on public health expenditure they used per capita gross state domestic product (GSDP) for income and per capita state public health expenditure (PHCE) for health. Panel data used for this analysis was from 1990 to 2002. First they checked the stationarity by using Augmented Dickey–Fuller test. The coefficients of estimates are elastic so the model is specified in log-log form. As a result of Hausman test, Random Effects model is