Population aging, health care, and growth: a comment on the effects of capital accumulation

Rosa Aisa and Fernando Pueyo

Journal of Population Economics, 2013, vol. 26, issue 4, 1285-1301

Abstract: In a recent paper, Hashimoto and Tabata (J Popul Econ 23:571–593, 2010 ) present a theoretical model in which the increase in the rate of dependence due to aging of the population leads to a reallocation of labor from non-health to health production and, as a consequence, to a decline in economic growth. We argue that these results rely heavily on assumptions of a “small economy” and perfect capital mobility, which tie down the amount of capital. In this paper, we proceed by analyzing the case of an economy in which the availability of capital is endogenously determined by domestic savings. We find that the new “capital accumulation effect” is opposite to the previous “dependency rate effect,” leaving the effect on economic growth ambiguous. In particular, if the former prevailed, population aging would foster economic growth, a result that finds support in recent empirical work. Copyright Springer-Verlag Berlin Heidelberg 2013

Keywords: Longevity; Population aging; Health workforce; Growth; O41; J14 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (13)

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DOI: 10.1007/s00148-012-0448-2

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