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Endogenous Health Care, Life Expectancy, and Economic Development

Author

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  • Wang, Yong

    (City University of Hong Kong)

  • Michael C M Leung

Abstract

We study the endogenous relationship between health care, life expectancy and output in a modified neoclassical growth model. While health care competes resources away from goods production, it prolongs life expectancy which in turn leads to higher capital accumulation. We show that savings and health care are complements in equilibrium, with both rising with economic development. Our model is therefore consistent with several stylized facts, namely, (i) countries spend more on health care as they prosper, (ii) individuals in rich countries tend to live longer, and (iii) population aging is more pronounced in rich countries. Moreover, through simulation, health care and health production technology are found to be growth and welfare enhancing.

Suggested Citation

  • Wang, Yong & Michael C M Leung, 2003. "Endogenous Health Care, Life Expectancy, and Economic Development," Royal Economic Society Annual Conference 2003 218, Royal Economic Society.
    • Handle: RePEc:ecj:ac2003:218
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    Cited by:

    1. Oded Stark & You Qiang Wang & Yong Wang, 2005. "Altruism: Evolution and a Repercussion," International Economic Association Series, in: Bina Agarwal & Alessandro Vercelli (ed.), Psychology, Rationality and Economic Behaviour, chapter 4, pages 84-105, Palgrave Macmillan.
    2. Oded Stark & Yong Wang, 2005. "The Intergenerational Overlap and Human Capital Formation," Review of International Economics, Wiley Blackwell, vol. 13(1), pages 45-58, February.
    3. Abdalali Monsef & Abolfazl Shahmohammadi Mehrjardi, 2015. "Determinants of Life Expectancy: A Panel Data Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(11), pages 1251-1257, November.
    4. Husain, Muhammad Jami, 2010. "Contribution of health to economic development: A survey and overview," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-52.
    5. Husain, Muhammad Jami, 2009. "Contribution of health to economic development: a survey and overview," Economics Discussion Papers 2009-40, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    Keywords

    life expectancy; health care; economic growth; population aging;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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