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Life expectancy and economic growth: the role of the demographic transition

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  • Matteo Cervellati

    ()

  • Uwe Sunde

    ()

Abstract

In this paper we investigate the causal effect of life expectancy on economic growth by explicitly accounting for the role of the demographic transition. In addition to focusing on issues of empirical identification, this paper emphasizes the role of the econometric specification. We present a simple theory of the economic and demographic transition where individuals' education and fertility decisions depend on their life expectancy. The theory predicts that before the demographic transition improvements in life expectancy primarily increase population. Improvements in life expectancy do, however, reduce population growth and foster human capital accumulation after the onset of the demographic transition. This implies that the effect of life expectancy on population, human capital and income per capita is not the same before and after the demographic transition. Moreover, a sufficiently high life expectancy is ultimately the trigger of the transition to sustained income growth. We provide evidence supporting these predictions using data on exogenous mortality reductions in the context of the epidemiological revolution.

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File URL: http://hdl.handle.net/10.1007/s10887-011-9065-2
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Bibliographic Info

Article provided by Springer in its journal Journal of Economic Growth.

Volume (Year): 16 (2011)
Issue (Month): 2 (June)
Pages: 99-133

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Handle: RePEc:kap:jecgro:v:16:y:2011:i:2:p:99-133

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Web page: http://www.springerlink.com/link.asp?id=102931

Related research

Keywords: Life expectancy; Income growth; Demographic transition; Population growth; Fertility; Unified growth theories; Non-Linear dynamics; Non-monotocities; IV estimates; Epidemiological revolution; J10; J13; N30; O10; O40; E10;

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  1. Life Expectancy and Economic Growth
    by Liam Delaney in Geary Behaviour Centre on 2009-08-12 17:39:00
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