Investing in healthcare as an investment in one of the main elements of human capital is a key prerequisite for improving the healthcare of individuals, and thus labor productivity and future economic growth of economies. Therefore, the aim of this study is to examine how much the amount of government expenditure in healthcare impacts the long term labor productivity in the 27 EU member states with special reference to the Republic of Croatia. In addition, two control variables will be included in the study to draw more reliable conclusions. Considering the results of previous empirical research, a research hypothesis has been set according to which expenditure on healthcare leads to an increase in labor productivity. In conducting an empirical analysis, the impact of health expenditures on labor productivity was examined using static panel models, using annual data in the observed period from 2001 to 2018. The F-test, the Hausman test and the Breusch-Pagan LM test were used to select the most suitable panel model for empirical analysis, on the basis of which it was concluded that a model with fixed effects was suitable. Accordingly, a detailed empirical analysis of the fixed-effect model was performed. The results of the conducted research indicate the existence of a positive correlation between health expenditures and labor productivity, which confirms the research hypothesis. Also, it has been shown that in the "old" members of the European Union this effect of productivity growth, which is caused by the growth of government spending on health, is smaller than the effect of growth in the "new" members of the European Union. Such results are also expected in accordance with the theory of economic convergence. Given the conclusion of this research, the recommendation to economic and health policy makers is to increase health expenditures, which will contribute to the growth of the overall economy through increased productivity.