IDEAS home Printed from https://ideas.repec.org/a/spr/etbull/v4y2016i2d10.1007_s40505-015-0084-6.html
   My bibliography  Save this article

Endogenous lifetime and economic growth: the roleof the tax rate

Author

Listed:
  • Laurent Brembilla

    (PSL, Université Paris-Dauphine, LEDa
    IRD, UMR Dial)

Abstract

This paper revisits the health-economic growth nexus from the seminal contribution of Chakraborty (J Econ Theory 116(1):119–137, 2004). In his two periods overlapping generations model with a lifetime depending on public health expenditures, I study the influence of the tax rate on the economy. This enables me to determine in which cases the health policy can spur economic growth. I present three results: (i) In the endogenous growth case, the health policy can eradicate some poverty traps. (ii) The growth-maximizing tax rate is 0 in low-income countries. (iii) The steady state income level is an inverted U-shaped function or a decreasing function of the tax rate.

Suggested Citation

  • Laurent Brembilla, 2016. "Endogenous lifetime and economic growth: the roleof the tax rate," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(2), pages 247-263, October.
    • Handle: RePEc:spr:etbull:v:4:y:2016:i:2:d:10.1007_s40505-015-0084-6
    DOI: 10.1007/s40505-015-0084-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40505-015-0084-6
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40505-015-0084-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Klaus Prettner, 2013. "Population aging and endogenous economic growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 811-834, April.
    2. Raouf Boucekkine & David de la Croix & Omar Licandro, 2003. "Early Mortality Declines at the Dawn of Modern Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 401-418, September.
    3. Daron Acemoglu & Simon Johnson, 2007. "Disease and Development: The Effect of Life Expectancy on Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 925-985, December.
    4. Anthony Strittmatter & Uwe Sunde, 2013. "Health and economic development—evidence from the introduction of public health care," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1549-1584, October.
    5. de la Croix, David & Ponthiere, Gregory, 2010. "On the Golden Rule of capital accumulation under endogenous longevity," Mathematical Social Sciences, Elsevier, vol. 59(2), pages 227-238, March.
    6. de la Croix, David & Licandro, Omar, 1999. "Life expectancy and endogenous growth," Economics Letters, Elsevier, vol. 65(2), pages 255-263, November.
    7. Kunze, Lars, 2014. "Life expectancy and economic growth," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 54-65.
    8. Philippe Aghion & Peter Howitt & Fabrice Murtin, 2011. "The Relationship Between Health and Growth: When Lucas Meets Nelson-Phelps," Review of Economics and Institutions, Università di Perugia, vol. 2(1).
    9. Menahem E. Yaari, 1965. "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(2), pages 137-150.
    10. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
    11. Quamrul H. Ashraf & Ashley Lester & David N. Weil, 2009. "When Does Improving Health Raise GDP?," NBER Chapters, in: NBER Macroeconomics Annual 2008, Volume 23, pages 157-204, National Bureau of Economic Research, Inc.
    12. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 352-352.
    13. Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(2), pages 187-204, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brembilla, Laurent, 2018. "Longevity and welfare in general equilibrium," Mathematical Social Sciences, Elsevier, vol. 93(C), pages 22-36.
    2. Cui, Xiaodong & Chang, Ching-Ter, 2020. "How life expectancy affects welfare in a Diamond-type overlapping generations model," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 555(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Annarita BALDANZI & Alberto BUCCI & Klaus PRETTNER, 2016. "The Effects of Health Investments on Human Capital and R&D-Driven Economic Growth," Departmental Working Papers 2016-17, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Baldanzi, Annarita & Bucci, Alberto & Prettner, Klaus, 2021. "Children’S Health, Human Capital Accumulation, And R&D-Based Economic Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 25(3), pages 651-668, April.
    3. Bloom, David E. & Kuhn, Michael & Prettner, Klaus, 2018. "Health and Economic Growth," IZA Discussion Papers 11939, Institute of Labor Economics (IZA).
    4. Tscheuschner, Paul, 2021. "Endogenous life expectancy and R&D-based economic growth," Hohenheim Discussion Papers in Business, Economics and Social Sciences 01-2021, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    5. Gehringer, Agnieszka & Prettner, Klaus, 2019. "Longevity And Technological Change," Macroeconomic Dynamics, Cambridge University Press, vol. 23(4), pages 1471-1503, June.
    6. Annarita Baldanzi & Klaus Prettner & Paul Tscheuschner, 2019. "Longevity-induced vertical innovation and the tradeoff between life and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(4), pages 1293-1313, October.
    7. Matteo Cervellati & Uwe Sunde, 2011. "Life expectancy and economic growth: the role of the demographic transition," Journal of Economic Growth, Springer, vol. 16(2), pages 99-133, June.
    8. Strulik, Holger & Werner, Katharina, 2012. "Life Expectancy, Labor Supply, and Long-Run Growth: Reconciling Theory and Evidence," Hannover Economic Papers (HEP) dp-497, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    9. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 41-74, March.
    10. Pestieau, Pierre & Ponthiere, Gregory, 2016. "Longevity Variations And The Welfare State," Journal of Demographic Economics, Cambridge University Press, vol. 82(2), pages 207-239, June.
    11. Thibault, Emmanuel & Ponthieres, Grégory, 2023. "Life Expectancy, Income and Long-Term Care: The Preston Curve Reexamined," TSE Working Papers 23-1474, Toulouse School of Economics (TSE).
    12. Cohen, Daniel & Leker, Laura, 2014. "Health and Education: Another Look with the Proper Data," CEPR Discussion Papers 9940, C.E.P.R. Discussion Papers.
    13. repec:got:cegedp:141 is not listed on IDEAS
    14. Agénor, Pierre-Richard, 2010. "A theory of infrastructure-led development," Journal of Economic Dynamics and Control, Elsevier, vol. 34(5), pages 932-950, May.
    15. Kuhn, Michael & Prettner, Klaus, 2016. "Growth and welfare effects of health care in knowledge-based economies," Journal of Health Economics, Elsevier, vol. 46(C), pages 100-119.
    16. Luciano Fanti & Luca Gori, 2014. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 529-564, April.
    17. Lei He & Zhengqi Wang, 2023. "The interaction effects of rising life expectancy and the public pension burden on aggregate savings and economic growth," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(2), pages 229-250, May.
    18. Michael Bar & Oksana Leukhina, 2010. "The role of mortality in the transmission of knowledge," Journal of Economic Growth, Springer, vol. 15(4), pages 291-321, December.
    19. Holger Strulik & Katharina Werner, 2016. "50 is the new 30—long-run trends of schooling and retirement explained by human aging," Journal of Economic Growth, Springer, vol. 21(2), pages 165-187, June.
    20. Carmen Camacho & Fernanda Estevan, 2023. "Intergeneration Human Capital Transmission and Poverty Traps," PSE Working Papers halshs-04075431, HAL.
    21. David de la Croix & Omar Licandro, 2013. "The Child is Father Of the Man: Implications for the Demographic Transition," Economic Journal, Royal Economic Society, vol. 123(567), pages 236-261, March.

    More about this item

    Keywords

    Endogenous longevity; Economic growth; Health and economic development; Overlapping generations;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:etbull:v:4:y:2016:i:2:d:10.1007_s40505-015-0084-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.