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Health, endogenous time preference, and inequality : a political economy perspective

Lahiri, Radhika & Richardson, Elizabeth (2009) Health, endogenous time preference, and inequality : a political economy perspective. In Proceedings of Econometric Society Australasian Meeting in 2009, Australian National University, Australian National University, Canberra, ACT, pp. 1-38.

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Abstract

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. Revenues allocated for public health care arc determined by a voting process. We find that the degree of substitutability between public and private health expenditures matters for macroeconomic outcomes of the model. Higher substitutability implies a “crowding-out" effect, which in turn impacts adversely on morality risks and impatience leading to lower public expenditures on health care in the political equilibrium. Consequently, higher substitutability is associated with greater polarization in wealth, and long-run distributions that are bimodal.

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ID Code: 32421
Item Type: Conference Paper
Keywords: Inequality and health, Endogenous time preference, Political economy, Income distribution, Polarization
Subjects: Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Urban and Regional Economics (140218)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Macroeconomics (incl. Monetary and Fiscal Theory) (140212)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200) > Public Economics- Publically Provided Goods (140214)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Copyright 2009 [please consult the authors]
Deposited On: 01 Jun 2010 14:44
Last Modified: 05 Jan 2011 23:59

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