EconPapers    
Economics at your fingertips  
 

Infectious Diseases, Human Capital and Economic Growth

Lin Liu and Aditya Goenka ()
Additional contact information
Lin Liu: University of Liverpool

No 1218, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: This paper investigates the joint determination of the transmission of infectious diseases, human capital accumulation and economic growth. We develop an economic epidemiological model by incorporating SIS epidemiological model into an endogenous growth model with human capital accumulation. Households choose how much to invest in human and physical capital, as well as in controlling the risk of infection. If an individual is infected, he is incapacitated and can neither work nor accumulate human capital. There are multiple balanced growth paths where the endogenous prevalence of the disease determines whether human capital is accumulated or not, i.e. whether there is sustained economic growth or a poverty trap. In the decentralized economy households fail to internalize the externality associated with controlling diseases. We further characterize the optimal solution and the subsidy that will decentralize it. With the optimal public health policy, economies are more likely to take off or grow at a higher rate. We show that there can be underinvestment in preventive health expenditures, and perversely for countries that are most afflicted with diseases and in a poverty trap, the optimal subsidy is lower than for growing economies. The poor health conditions are not only the result of tighter budget constraints, but more importantly the lack of incentives for investing in health capital.

Date: 2017
New Economics Papers: this item is included in nep-dge, nep-gro and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
https://economicdynamics.org/meetpapers/2017/paper_1218.pdf (application/pdf)

Related works:
Journal Article: Infectious diseases, human capital and economic growth (2020) Downloads
Working Paper: Infectious Diseases, Human Capital and Economic Growth (2019) Downloads
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:red:sed017:1218

Access Statistics for this paper

More papers in 2017 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

 
Page updated 2021-12-24
Handle: RePEc:red:sed017:1218