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On the distributional consequences of epidemics

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  • Boucekkine, Raouf
  • Laffargue, Jean-Pierre

Abstract

We develop a tractable general theory for the study of the economic and demographic impact of epidemics, notably its distributional consequences. To this end, we build up a three-period overlapping generations model where altruistic parents choose optimal health expenditures for their children and themselves. The survival probability of adults and children depends on such investments. Agents can be skilled or unskilled. In this paper, epidemics are modeled as one-period exogenous shocks to the adults' survival rates. We first show that such epidemics have permanent effects on the size of population and on the level of output. However, the income distribution is shown to be unaltered in the long-run. Second, we show that this distribution may be significantly altered in the medium-term: in particular, the proportion of the unskilled will necessarily increase at that term if orphans are too penalized in the access to education.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 34 (2010)
Issue (Month): 2 (February)
Pages: 231-245

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Handle: RePEc:eee:dyncon:v:34:y:2010:i:2:p:231-245

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Web page: http://www.elsevier.com/locate/jedc

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Keywords: Epidemics Orphans Income distribution Endogenous survival Medium-term dynamics;

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References

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Citations

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Cited by:
  1. repec:hal:wpaper:halshs-00676492 is not listed on IDEAS
  2. Karlsson, Martin & Nilsson, Therese & Pichler, Stefan, 2012. "What doesn't kill you makes you stronger? The Impact of the 1918 Spanish Flu Epidemic on Economic Performance in Sweden," Working Papers 2012:7, Lund University, Department of Economics.
  3. Catarina Goulao & Agustin Pérez-Barahona, 2012. "Intergenerational transmission of non-communicable chronic diseases," Working Papers hal-00690325, HAL.
  4. Augier, Laurent & Yaly, Amy, 2013. "Economic growth and disease in the OLG model: The HIV/AIDS case," Economic Modelling, Elsevier, vol. 33(C), pages 471-481.
  5. Azomahou, Theophile & Soete, Luc & Diene, Bity & Diene, Mbaye, 2012. "Optimal health investment with separable and non-separable preferences," MERIT Working Papers 047, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  6. repec:hal:wpaper:halshs-00746913 is not listed on IDEAS
  7. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española, IEF, vol. 200(1), pages 41-74, March.
  8. Clive Bell & Hans Gersbach, 2006. "Growth and Enduring Epidemic Diseases," CER-ETH Economics working paper series 06/57, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  9. Vasilakis, Chrysovalantis, 2011. "Fighting poverty and child malnutrition: on the design of foreign aid policies," MPRA Paper 30066, University Library of Munich, Germany.
  10. Grégory Ponthière, 2012. "Fair Accumulation under Risky Lifetime," PSE Working Papers halshs-00746913, HAL.

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