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Endogenous lifetime and economic growth (2004)
| Venue: | Journal of Economic Theory |
| Citations: | 131 - 3 self |
BibTeX
@ARTICLE{Chakraborty04endogenouslifetime,
author = {Shankha Chakraborty and For Useful Conversation and Richard Barrett and Farmer Gary Hansen},
title = {Endogenous lifetime and economic growth},
journal = {Journal of Economic Theory},
year = {2004},
pages = {119--137}
}
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Abstract
errors are mine. Endogenous Lifetime and Economic Growth Conventional wisdom attributes the severity of mortality in poorer countries to widespread poverty and inadequate living conditions. This paper considers the possibility that persistent poverty may arise, in turn, from a high incidence of mortality. Endogenous mortality risk is introduced in a two-period overlapping generations model: probability of survival from the ¯rst period to the next depends upon health capital that can be augmented through public investment. High mortality societies do not grow fast since shorter lifespans discourage saving and investment; multiple steady-states are possible. High mortality also reduces returns on investments, like education, where risks are undiversi¯able. When human capital drives economic growth, countries di®ering in only health capital do not converge to similar living standards; `threshold e®ects ' may also result.
Keyphrases
endogenous lifetime economic growth inadequate living condition rst period economic growth conventional wisdom human capital drive economic growth poorer country public investment endogenous mortality risk high mortality upon health capital high incidence widespread poverty persistent poverty high mortality society health capital similar living standard multiple steady-states two-period overlapping generation model
