Endogenous mortality, human capital and economic growth
Osang, Thomas & Sarkar, Jayanta (2008) Endogenous mortality, human capital and economic growth. Journal of Macroeconomics, 30(4), pp. 1423-1445.
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.
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|Item Type:||Journal Article|
|Keywords:||Health, Life expectancy, Human capital, Public spending, Endogenous growth|
|Subjects:||Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > Economic Theory (140100)|
|Divisions:||Current > QUT Faculties and Divisions > QUT Business School|
Current > Schools > School of Economics & Finance
|Copyright Owner:||Copyright 2007 Elsevier Inc.|
|Deposited On:||25 Aug 2011 08:10|
|Last Modified:||01 Mar 2012 00:23|
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