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Endogenous Mortality, Human Capital and Endogenous Growth

Author

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  • Osang, Thomas

    () (Department of Economics, Southern Methodist University)

  • Sarkar, Jayanta

    () (Department of Economics, Southern Methodist University)

Abstract

We consider growth and welfare effects of lifetime-uncertainty in an economy with human capital-led endogenous growth. We argue that lifetime uncertainty reduces private incentives to invest in both physical and human capital. Using an overlapping generations framework with finite-lived households we analyze the relevance of government expenditure on health and education to counter such growth-reducing forces. We focus on three different models that differ with respect to the mode of financing of education: (i) both private and public spending, (ii) only public spending, and (iii) only private spending. Results show that models (i) and (iii) outperform model (ii) with respect to long-term growth rates of per capita income, welfare levels and other important macroeconomic indicators. Theoretical predictions of model rankings for these macroeconomic indicators are also supported by observed stylized facts.

Suggested Citation

  • Osang, Thomas & Sarkar, Jayanta, 2005. "Endogenous Mortality, Human Capital and Endogenous Growth," Departmental Working Papers 0511, Southern Methodist University, Department of Economics.
  • Handle: RePEc:smu:ecowpa:0511
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    File URL: ftp://ftp1.economics.smu.edu/WorkingPapers/2005/osang/Paper1-rev-2007.pdf
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    References listed on IDEAS

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    Cited by:

    1. Stephen M. Miller & Kyriakos C. Neanidis, 2012. "Demographic Transition and Economic Welfare: The Role of Humanitarian Aid," Working papers 2012-06, University of Connecticut, Department of Economics.
    2. Agénor, Pierre-Richard & Canuto, Otaviano, 2015. "Gender equality and economic growth in Brazil: A long-run analysis," Journal of Macroeconomics, Elsevier, pages 155-172.
    3. Rangan Gupta & Cobus Vermeulen, 2010. "Private and Public Health Expenditures in an Endogenous Growth Model with Inflation Targeting," Annals of Economics and Finance, Society for AEF, vol. 11(1), pages 139-153, May.
    4. Carlotta Balestra & Davide Dottori, 2012. "Aging society, health and the environment," Journal of Population Economics, Springer;European Society for Population Economics, pages 1045-1076.
    5. Karine Constant, 2015. "Environmental Policy and Inequality: A Matter of Life and Death," Working Papers halshs-01174052, HAL.
    6. Pierre-Richard Agénor, 2012. "A Computable OLG Model for Gender and Growth Policy Analysis," Centre for Growth and Business Cycle Research Discussion Paper Series 169, Economics, The Univeristy of Manchester.
    7. Carlotta Balestra & Davide Dottori, 2012. "Aging society, health and the environment," Journal of Population Economics, Springer;European Society for Population Economics, pages 1045-1076.
    8. Pierre-Richard Agénor, 2015. "Public capital, health persistence and poverty traps," Journal of Economics, Springer, vol. 115(2), pages 103-131, June.

    More about this item

    Keywords

    Health; Life Expectancy; Human Capital; Public Spending; Endogenous Growth;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I2 - Health, Education, and Welfare - - Education
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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