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 first 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 undiversifiable. When human capital drives economic growth, countries differing in only health capital do not converge to similar living standards; 'threshold effects' may also result.

[1]  Partha Dasgupta.  An Inquiry into Well-Being and Destitution , 1993 .

[2]  Ellen R. McGrattan,et al.  The Poverty of Nations: A Quantitative Investigation , 1997 .

[3]  J. Sachs,et al.  Natural Resource Abundance and Economic Growth , 1995 .

[4]  Laurence J. Kotlikoff,et al.  The Family as an Incomplete Annuities Market , 1979, Journal of Political Economy.

[5]  Francis T. Lui,et al.  Intergenerational Trade, Longevity, and Economic Growth , 1991, Journal of Political Economy.

[6]  D. Weil,et al.  A Contribution to the Empirics of Economic Growth Author ( s ) : , 2008 .

[7]  David de la Croix,et al.  Life expectancy and endogenous growth , 1999, Economics Letters.

[8]  P. Musgrove,et al.  A critical review of 'a critical review': the methodology of the 1993 World Development Report, 'Investing in Health'. , 2000, Health policy and planning.

[9]  D. Weil,et al.  Mortality Decline, Human Capital Investment and Economic Growth , 2000 .

[10]  Allan Drazen,et al.  Threshold Externalities in Economic Development , 1990 .

[11]  Emily C Lawrance.  Poverty and the Rate of Time Preference: Evidence from Panel Data , 1991, Journal of Political Economy.

[12]  R. Summers,et al.  The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1987 , 1991 .

[13]  G. Cipriani,et al.  Endogenous fertility, mortality and growth , 1998, Journal of population economics.

[14]  Angus Deaton,et al.  Saving, Growth, and Aging in Taiwan , 1993 .

[15]  R. Levine,et al.  A Sensitivity Analysis of Cross-Country Growth Regressions , 1991 .

[16]  Luisa Fuster,et al.  Effects of uncertain lifetime and annuity insurance on capital accumulation and growth , 1999 .

[17]  Stephen L. Parente,et al.  Barriers to Technology Adoption and Development , 1994, Journal of Political Economy.

[18]  Mark Gersovitz,et al.  Savings and Nutrition at Low Incomes , 1983, Journal of Political Economy.

[19]  John Luke Gallup,et al.  The Economic Burden of Malaria : Cross-Country Evidence , 1998 .

[20]  W. Lewis.  Economic Development with Unlimited Supplies of Labour , 1954 .

[21]  M. Yaari,et al.  Uncertain lifetime, life insurance, and the theory of the consumer , 1965 .

[22]  Theodore W. Schultz,et al.  Life Span, Health, Savings, and Productivity , 1979, Economic Development and Cultural Change.

[23]  P. Romer.  Increasing Returns and Long-Run Growth , 1986, Journal of Political Economy.

[24]  Peter J. Klenow,et al.  The Neoclassical Revival in Growth Economics: Has It Gone Too Far? , 1997, NBER Macroeconomics Annual.

[25]  M. F.,et al.  Bibliography , 1985, Experimental Gerontology.

[26]  P. Dorian Owen,et al.  Health capital and cross-country variation in income per capita in the Mankiw-Romer-Weil model , 1995 .

[27]  R. Barro,et al.  International Comparisons of Educational Attainment , 1993 .

[28]  John S. Strauss,et al.  Health nutrition and economic development. , 1998 .

[29]  Jstor,et al.  Invention in the Industrial Research Laboratory , 1963, Journal of Political Economy.

[30]  A CHAVEZ,et al.  [NUTRITION AND ECONOMIC DEVELOPMENT]. , 1963, Salud publica de Mexico.

[31]  Ellen R. McGrattan,et al.  Explaining cross-country income differences , 1999 .

[32]  C. I. Jones,et al.  Why Do Some Countries Produce so Much More Output Per Worker than Others? , 1998 .

[33]  X. Sala-i-Martin,et al.  I Just Ran Four Million Regressions , 1997 .

[34]  Olivier J. Blanchard,et al.  Debt, Deficits, and Finite Horizons , 1984, Journal of Political Economy.

[35]  R. Lucas.  On the Mechanics of Economic Development , 1988 .

[36]  Jan Tinbergen,et al.  Economic Backwardness and Economic Growth. , 1958 .

[37]  Robert W. Fogel,et al.  New findings on secular trends in nutrition and mortality: Some implications for population theory , 1997 .

[38]  Ulla Lehmijoki.  Demographic Transition and Economic Growth , 2003 .

[39]  Amartya Lahiri,et al.  The precious bane , 1999 .

[40]  O. Hart,et al.  A Theory of Debt Based on the Inalienability of Human Capital , 1991 .

[41]  M. S. Hill,et al.  Studies in the Economics of Aging , 1997 .

[42]  William Easterly,et al.  Africa's Growth Tragedy , 1996 .

[43]  W. Easterly,et al.  Africa's Growth Tragedy: Policies and Ethnic Divisions , 1997 .