Public Capital, Health Persistence and Poverty Traps
Growth dynamics and health outcomes are studied in a three period overlapping generations model with public capital. Reproductive agents face a non-zero probability of death in both childhood and adulthood. In addition to working, adults allocate time to their own health and child rearing. Health status in adulthood depends on health in childhood. With partial persistence in health, pure stagnation may occur. With full persistence, a stagnating equilibrium with low growth and high fertility may result from poor access to public capital. With threshold effects in health status, multiple growth regimes may emerge. A reallocation of public spending toward health or infrastructure may shift the economy from a low-growth equilibrium to a high-growth, low-fertility steady state.
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