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Public and Private Expenditures on Health in the Presence of Inequality and Endogenous Mortality: A Political Economy Perspective

  • Radhika Lahiri
  • Elizabeth Richardson

In this paper we study an overlapping-generations model in which agents� mortality risks, and consequently impatience, are endogenously determined by private and public investment in health care. The proportion of revenues allocated for public health care is also endogenous, determined as the outcome of a voting process. Higher substitutability between public and private health is associated with a �crowding-out� effect which leads to lower public expenditures on health care in the political equilibrium. This in turn impacts on mortality risks and impatience leading to a greater persistence in inequality and long run distributions of wealth that are bimodal.

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File URL: http://external-apps.qut.edu.au/business/documents/discussionPapers/2008/240Lahiri.pdf
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Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 240.

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Length: 38 pages
Date of creation: 15 Dec 2008
Date of revision: 15 Dec 2008
Handle: RePEc:qut:dpaper:240
Contact details of provider: Postal: GPO Box 2434, BRISBANE QLD 4001
Web page: http://www.bus.qut.edu.au/faculty/economics/
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  1. Mausumi Das & Shankha Chakraborty, 2010. "Mortality, Human Capital and Persistent Inequality," Working Papers id:2365, eSocialSciences.
  2. Kimberly J. Rask & Kevin N. Rask, 2005. "Delivering Public Health Care Services: Substitutes, Complements, or Both?," Contemporary Economic Policy, Western Economic Association International, vol. 23(1), pages 28-39, 01.
  3. Ray, Debraj & Streufert, Peter A, 1993. "Dynamic Equilibria with Unemployment Due to Undernourishment," Economic Theory, Springer, vol. 3(1), pages 61-85, January.
  4. Ben J. Heijdra & Ward E. Romp, 2008. "A life-cycle overlapping-generations model of the small open economy," Oxford Economic Papers, Oxford University Press, vol. 60(1), pages 88-121, January.
  5. Lahiri Radhika, 2007. "Liquidity Effects, Variable Time Preference, and Optimal Monetary Policy," The B.E. Journal of Macroeconomics, De Gruyter, vol. 7(1), pages 1-24, January.
  6. Glomm, Gerhard & Palumbo, Michael G., 1993. "Optimal intertemporal consumption decisions under the threat of starvation," Journal of Development Economics, Elsevier, vol. 42(2), pages 271-291, December.
  7. Quah, Danny T., 1996. "Empirics for economic growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1353-1375, June.
  8. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
  9. David M. Cutler & Jonathan Gruber, 1995. "Does Public Insurance Crowd Out Private Insurance?," NBER Working Papers 5082, National Bureau of Economic Research, Inc.
  10. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
  11. Oded Galor & David Mayer-Foulkes, 2004. "Food for Thought: Basic Needs and Persistent Educational Inequality," GE, Growth, Math methods 0410002, EconWPA.
  12. Lahiri, Radhika, 2002. "The Inflation Tax, Variable Time Preference, And The Business Cycle," Macroeconomic Dynamics, Cambridge University Press, vol. 6(04), pages 496-522, September.
  13. Miguel Gouveia, 1997. "Majority rule and the public provision of a private good," Public Choice, Springer, vol. 93(3), pages 221-244, December.
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