Untimely Destruction: Pestilence, War and Accumulation in the Long Run

Clive Bell, Hans Gersbach and Evgenij Komarov ()
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Evgenij Komarov: ETH Zurich

No 12680, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyses the effects of disease and war on the accumulation of human and physical capital. We employ an overlapping-generations frame-work in which young adults, confronted with such hazards and motivated by old-age provision and altruism, make decisions about investments in schooling and reproducible capital. A poverty trap exists for a wide range of stationary war losses and premature adult mortality. If parents are altruistic and their sub-utility function for own consumption is more concave than that for the children's human capital, the only possible steady-state growth path involves full education. Otherwise, steady-state paths with incompletely educated children may exist, some of them stationary ones. We also examine, analytically and with numerical examples, a growing economy's robustness in a stochastic environment. The initial boundary conditions have a strong influence on outcomes in response to a limited sequence of destructive shocks.

Keywords: steady states; capital accumulation and destruction; premature mortality; poverty traps; overlapping generations (search for similar items in EconPapers)
JEL-codes: D91 E13 I15 I25 O11 O41 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2019-10
New Economics Papers: this item is included in nep-dem, nep-dge, nep-gro and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Macroeconomic Dynamics, 2024, 28 (7), 1451 - 1492

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