Endogenous life expectancy and R&D-based economic growth
No 01-2021, Hohenheim Discussion Papers in Business, Economics and Social Sciences from University of Hohenheim, Faculty of Business, Economics and Social Sciences
We propose an overlapping generations framework in which life expectancyis determined endogenously by governmental health investments. As a novelty, we are able to examine the feedback effects between life expectancy and R&D-driven economic growth for the transitional dynamics. We find that i) higher survival induces economic growth through higher savings and higherlabor force participation; ii) longevity-induced reductions in fertility hampereconomic development; iii) the positive life expectancy effects of larger savingsand higher labor force participation outweigh the negative effect of a reductionin fertility, and iv) there exists a growth-maximizing size of the health caresector that might lie beyond what is observed in most countries. Altogether, the results support a rather optimistic view on the relationship between lifeexpectancy and economic growth and contribute to the debate surroundingrising health shares and economic development.
Keywords: long-run growth; horizontal innovation; increasing life expectancy; welfare effects of changing longevity; size of health-care sectors (search for similar items in EconPapers)
JEL-codes: I15 J11 J13 J17 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dge, nep-gro, nep-knm, nep-lab and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:hohdps:012021
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