Endogenous Mortality, Human Capital and Endogenous Growth

Thomas Osang () and Jayanta Sarkar

No 511, Departmental Working Papers from Southern Methodist University, Department of Economics

Abstract: 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.

Keywords: Health; Life Expectancy; Human Capital; Public Spending; Endogenous Growth (search for similar items in EconPapers)
JEL-codes: H5 I1 I2 O1 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2005-09-01
New Economics Papers: this item is included in nep-dev, nep-dge, nep-hea and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:smu:ecowpa:0511

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