Optimal health investment and preference structure

Théophile Azomahou, Bity Diene, Mbaye Diene and Luc Soete (l.soete@maastrichtuniversity.nl)
Additional contact information
Théophile Azomahou: CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique
Bity Diene: CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique
Mbaye Diene: UCAD - Université Cheikh Anta Diop de Dakar [Sénégal]

Post-Print from HAL

Abstract: This paper develops a general equilibrium framework to study the role of preference structure (additive, multiplicative and a convex combination of the two) in connecting consumption, health investment, stock of health and capital, and their effects on the wage rate and on productivity. We show that the elasticities of health production, health investment and health cost determine jointly how health influences thewage rate.We examine the steady state and the equilibrium dynamics of the model. In the case of additive preferences, the existence of equilibrium and the stability of the dynamic system require that the ratio of the elasticities of the cost of health and health investment is greater than the elasticity of the production function of health. Health stock can have either positive or negative effects on wages via a mechanism of reservation wages.When preferences are multiplicative, the condition of the existence of equilibrium and the stability of the dynamic system reverse, and the effect of health stock on wages is always positive. Longevity is a decreasing convex–concave function of the elasticity of inter-temporal substitution of health. We also compare the relative behavior of opportunity costs of health under preference structure.

Keywords: Consumption; ·; Health; investment; ·; Wage; ·; Longevity; ·; Opportunity; costs (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

Published in Economic Theory, 2015, 60 (3), pp.521-565. ⟨10.1007/s00199-015-0896-5⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Optimal health investment and preference structure (2015)
Working Paper: Optimal health investment and preferences structure (2015)
Working Paper: Optimal health investment and preferences structure (2015)
Working Paper: Optimal health investment and preferences structure (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01228716

DOI: 10.1007/s00199-015-0896-5

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD (hal@ccsd.cnrs.fr).