Growth and Welfare under Endogenous Lifetime
AbstractWelfare aspects of longevity increases are often discussed neglecting the complex relationship between longevity and economic growth, which is the focal point of another literature. Combining both perspectives, we develop an endogenous growth OLG-framework to investigate how longevity affects economic growth and welfare. In our model, life expectancy is determined endogenously by individuals' investments in healthcare. In our benchmark specification growth effects are small, but direct welfare gains from longer lifetimes can be substantial. In the generalized model specification the growth effect dominates and may even lead to overall welfare losses from longevity increases. We interpret our results with respect to real world data and discuss the importance of assumptions about the engine of growth as well as the externalities associated with healthcare investments. --
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Bibliographic InfoPaper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 80018.
Date of creation: 2013
Date of revision:
Other versions of this item:
- Maik T. Schneider & Ralph Winkler, 2010. "Growth and Welfare under Endogenous Lifetime," CER-ETH Economics working paper series 10/137, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Maik T. Schneider & Ralph Winkler, 2010. "Growth and Welfare under Endogenous Lifetime," Diskussionsschriften dp1013, Universitaet Bern, Departement Volkswirtschaft.
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- I10 - Health, Education, and Welfare - - Health - - - General
- J10 - Labor and Demographic Economics - - Demographic Economics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-DGE-2014-02-02 (Dynamic General Equilibrium)
- NEP-GRO-2014-02-02 (Economic Growth)
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