IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Growth and Welfare under Endogenous Lifetime

Listed author(s):
  • Maik T. Schneider
  • Ralph Winkler

We develop a perpetual youth model to investigate how longevity affects economic growth and welfare. Life expectancy is determined by individuals' investments in healthcare. We find that improvements in the healthcare technology always increase the steady state growth rate. Although the effect is small, even for large increases in longevity, welfare gains may be substantial depending on the type of the technological improvement. We identify two externalities associated with healthcare investments and provide a condition when healthcare expenditures are inefficiently low in the market equilibrium. Finally, we discuss our results with respect to alternative spillover specifications in the production sector.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.vwl.unibe.ch/papers/dp/dp1013.pdf
Download Restriction: no

Paper provided by Universitaet Bern, Departement Volkswirtschaft in its series Diskussionsschriften with number dp1013.

as
in new window

Length:
Date of creation: Sep 2010
Handle: RePEc:ube:dpvwib:dp1013
Contact details of provider: Postal:
Schanzeneckstr. 1, PF 8573, CH-3001 Bern

Phone: 0041 31 631 45 06
Fax: 41 31 631 37 83
Web page: http://www.vwi.unibe.ch/content/publikationen/index_eng.html

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Kalemli-Ozcan, Sebnem & Ryder, Harl E. & Weil, David N., 2000. "Mortality decline, human capital investment, and economic growth," Journal of Development Economics, Elsevier, vol. 62(1), pages 1-23, June.
  2. Moshe Hazan & Hosny Zoabi, 2006. "Does longevity cause growth? A theoretical critique," Journal of Economic Growth, Springer, vol. 11(4), pages 363-376, December.
  3. Omar Licandro & David de la Croix, 2008. "The Child is Father of the Man: Implications for the Demographic Transition," 2008 Meeting Papers 186, Society for Economic Dynamics.
  4. Ken-ichi Hashimoto & Ken Tabata, 2010. "Population aging, health care, and growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(2), pages 571-593, March.
  5. Azomahou, Théophile & Boucekkine, Raouf & Diene, Bity, 2008. "A Closer Look at the Relationship Between Life Expectancy and Economic Growth," MERIT Working Papers 027, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  6. David M. Cutler & Angus S. Deaton & Adriana Lleras-Muney, 2006. "The Determinants of Mortality," Working Papers id:359, eSocialSciences.
  7. Clive Bell & Shantayanan Devarajan & Hans Gersbach, 2006. "The Long-Run Economic Costs of aids: A Model with an Application to South Africa," World Bank Economic Review, World Bank Group, vol. 20(1), pages 55-89.
  8. Zafer Caliskan, 2009. "The relationship between pharmaceutical expenditure and life expectancy: evidence from 21 OECD countries," Applied Economics Letters, Taylor & Francis Journals, vol. 16(16), pages 1651-1655.
  9. David de la Croix & Omar Licandro, 2008. "The Child is Father of the Man: by Implications for the Demographic Transition," Working Papers 2008-04, FEDEA.
  10. Jochen Hartwig, 2006. "What Drives Health Care Expenditure? Baumol’s Model of ‘Unbalanced Growth’ Revisited," KOF Working papers 06-133, KOF Swiss Economic Institute, ETH Zurich.
  11. Zhao, Kai, 2014. "Social security and the rise in health spending," Journal of Monetary Economics, Elsevier, vol. 64(C), pages 21-37.
  12. Raouf Boucekkine & David de la Croix & Omar Licandro, "undated". "vintage human capital, demographic trends and endogenous growth," Working Papers 2000-02, FEDEA.
  13. Heijdra, Ben J. & Mierau, Jochen O., 2012. "The individual life-cycle, annuity market imperfections and economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 36(6), pages 876-890.
  14. Sherwin Rosen, "undated". "The Value of Changes in Life Expectancy," University of Chicago - Population Research Center 87-14, Chicago - Population Research Center.
  15. Roozbeh Hosseini, 2015. "Adverse Selection in the Annuity Market and the Role for Social Security," Journal of Political Economy, University of Chicago Press, vol. 123(4), pages 941-984.
  16. Kevin M. Murphy & Robert H. Topel, 2005. "The Value of Health and Longevity," NBER Working Papers 11405, National Bureau of Economic Research, Inc.
  17. Sarah Brown & Jenny Roberts & Karl Taylor, 2008. "Reservation Wages, Labour Market Participation And Health," Working Papers 2008002, The University of Sheffield, Department of Economics, revised Feb 2008.
  18. Dwyer, Debra Sabatini & Mitchell, Olivia S., 1999. "Health problems as determinants of retirement: Are self-rated measures endogenous?," Journal of Health Economics, Elsevier, vol. 18(2), pages 173-193, April.
  19. Charles I. Jones & Peter J. Klenow, 2016. "Beyond GDP? Welfare across Countries and Time," American Economic Review, American Economic Association, vol. 106(9), pages 2426-2457, September.
  20. 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.
  21. Matthias Doepke, 2001. "Accounting for Fertility Decline During the Transition to Growth," UCLA Economics Working Papers 804, UCLA Department of Economics.
  22. 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.
  23. Kuhn, Michael & Wrzaczek, Stefan & Prskawetz, Alexia & Feichtinger, Gustav, 2015. "Optimal choice of health and retirement in a life-cycle model," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 186-212.
  24. L. Eeckhoudt & P. Pestiau, 2008. "A note on longevity enchancing investment," Post-Print hal-00326104, HAL.
  25. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
  26. Disney, Richard & Emmerson, Carl & Wakefield, Matthew, 2006. "Ill health and retirement in Britain: A panel data-based analysis," Journal of Health Economics, Elsevier, vol. 25(4), pages 621-649, July.
  27. Shankha Chakraborty & Mausumi Das, 2004. "Mortality, Human Capital and Persistent Inequality," Econometric Society 2004 North American Summer Meetings 100, Econometric Society.
  28. Aisa, Rosa & Pueyo, Fernando, 2006. "Government health spending and growth in a model of endogenous longevity," Economics Letters, Elsevier, vol. 90(2), pages 249-253, February.
  29. Alwyn Young, 2005. "The Gift of the Dying: The Tragedy of AIDS and the Welfare of Future African Generations," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 423-466.
  30. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
  31. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
  32. Bell, Clive & Gersbach, Hans, 2006. "The Macroeconomics of Targeting: The Case of an Enduring Epidemic," IZA Discussion Papers 2393, Institute for the Study of Labor (IZA).
  33. Iza Padilla, María Amaya & Echevarría Olave, Cruz Ángel, 2005. "Life Expectancy, Human Capital, Social Security and Growth," DFAEII Working Papers 2005-17, University of the Basque Country - Department of Foundations of Economic Analysis II.
  34. Davies, James B. & Kuhn, Peter, 1992. "Social security, longevity, and moral hazard," Journal of Public Economics, Elsevier, vol. 49(1), pages 91-106, October.
  35. Tomas J. Philipson & Gary S. Becker, 1998. "Old-Age Longevity and Mortality-Contingent Claims," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 551-573, June.
  36. Kalemli-Ozcan, Sebnem, 2002. "Does the Mortality Decline Promote Economic Growth?," Journal of Economic Growth, Springer, vol. 7(4), pages 411-439, December.
  37. García-Gómez, Pilar & Jones, Andrew M. & Rice, Nigel, 2010. "Health effects on labour market exits and entries," Labour Economics, Elsevier, vol. 17(1), pages 62-76, January.
  38. Menahem E. Yaari, 1965. "Uncertain Lifetime, Life Insurance, and the Theory of the Consumer," Review of Economic Studies, Oxford University Press, vol. 32(2), pages 137-150.
  39. Matteo Cervellati & Uwe Sunde, 2005. "Human Capital Formation, Life Expectancy, and the Process of Development," American Economic Review, American Economic Association, vol. 95(5), pages 1653-1672, December.
  40. Klaus Prettner, 2009. "Population ageing and endogenous economic growth," Working Papers 0908, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
  41. Fonseca, Raquel & Michaud, Pierre-Carl & Galama, Titus & Kapteyn, Arie, 2009. "On The Rise of Health Spending and Longevity," IZA Discussion Papers 4622, Institute for the Study of Labor (IZA).
  42. Calvo, Guillermo A & Obstfeld, Maurice, 1988. "Optimal Time-Consistent Fiscal Policy with Finite Lifetimes," Econometrica, Econometric Society, vol. 56(2), pages 411-432, March.
  43. van Zon, Adriaan & Muysken, Joan, 2001. "Health and endogenous growth," Journal of Health Economics, Elsevier, vol. 20(2), pages 169-185, March.
  44. Charles I. Jones, 2016. "Life and Growth," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 539-578.
  45. Jie Zhang & Junsen Zhang & Michael Leung, 2006. "Health investment, saving, and public policy," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 68-93, February.
  46. Gary S. Becker & Tomas J. Philipson & Rodrigo R. Soares, 2005. "The Quantity and Quality of Life and the Evolution of World Inequality," American Economic Review, American Economic Association, vol. 95(1), pages 277-291, March.
  47. Bates, Laurie J. & Santerre, Rexford E., 2013. "Does the U.S. health care sector suffer from Baumol's cost disease? Evidence from the 50 states," Journal of Health Economics, Elsevier, vol. 32(2), pages 386-391.
  48. Michael C.M. Leung & Yong Wang, 2010. "Endogenous Health Care, Life Expectancy And Economic Growth," Pacific Economic Review, Wiley Blackwell, vol. 15(1), pages 11-31, 02.
  49. Cannon, Edmund & Tonks, Ian, 2008. "Annuity Markets," OUP Catalogue, Oxford University Press, number 9780199216994.
  50. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
  51. Felix Reichling & Kent Smetters, 2015. "Optimal Annuitization with Stochastic Mortality and Correlated Medical Costs," American Economic Review, American Economic Association, vol. 105(11), pages 3273-3320, November.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ube:dpvwib:dp1013. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Silvia Glusstein-Gerber)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.