Endogenous labour supply, endogenous lifetime and economic development

This article develops a theory to explain economic development in a neoclassical growth model. The (co)existence of endogenous labour supply and endogenous lifetime (affected by public and private expenditures on health) allows to effectively observe multiple development scenarios under the assumption of gross substitutability between consumption and leisure. The initial condition of a macro-economy (history) and expectation-driven coordination failures (indeterminacy) become alternative explanations of long-term demo-economic outcomes of nations. The novelty of this study is to link the theoretical literature on endogenous lifetime and economic growth with the theoretical literature on endogenous labour supply and indeterminacy by concentrating on the global analysis. The model also allows to explain the coexistence of least-developed, developing and developed countries in the same setting.