Endogenous lifetime and economic growth
AbstractConventional wisdom attributes the severity of mortality in poorer countries to widespread poverty and inadequate living conditions. This paper considers the possibility that persistent poverty may arise, in turn, from a high incidence of mortality. Endogenous mortality risk is introduced in a two-period overlapping generations model: probability of survival from the first period to the next depends upon health capital that can be augmented through public investment. High mortality societies do not grow fast since shorter lifespans discourage saving and investment; multiple steady-states are possible. High mortality also reduces returns on investments, like education, where risks are undiversifiable. When human capital drives economic growth, countries differing in only health capital do not converge to similar living standards; 'threshold effects' may also result.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 116 (2004)
Issue (Month): 1 (May)
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Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- Shankha Chakraborty, 2002. "Endogenous Lifetime and Economic Growth," University of Oregon Economics Department Working Papers 2002-03, University of Oregon Economics Department, revised 26 Jan 2002.
- I10 - Health, Education, and Welfare - - Health - - - General
- I20 - Health, Education, and Welfare - - Education - - - General
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
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