Growth and welfare effects of health care in knowledge based economies

Michael Kuhn and Klaus Prettner

No 03/2012, ECON WPS - Working Papers in Economic Theory and Policy from TU Wien, Institute of Statistics and Mathematical Methods in Economics, Economics Research Unit

Abstract: We study the effects of a labor-intensive health care sector within an R&D-driven growth model with overlapping generations. Health care increases longevity and labor participation/productivity. We examine under which conditions expanding health care enhances growth and welfare. Even if the provision of health care diverts labor from productive activities, it may still fuel R&D and economic growth if the additional wealth that comes with expanding longevity translates into a more capital/machine- intensive final goods production and, thereby, raises the return to developing new machines. We establish mild conditions under which an expansion of health care beyond the growth-maximizing level is Pareto-improving.

Keywords: endogenous growth; mortality; (Blanchard) overlapping generations; health care; research and development; sectoral composition (search for similar items in EconPapers)
JEL-codes: I15 I18 O11 O41 O43 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge, nep-fdg, nep-hea, nep-ino and nep-knm
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Growth and welfare effects of health care in knowledge-based economies (2016)
Working Paper: Growth and Welfare Effects of Health Care in Knowledge Based Economies (2013)
Working Paper: Growth and welfare e ffects of health care in knowledge based economies (2012)
Working Paper: Growth and Welfare Effects of Health Care in Knowledge Based Economies (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuweco:032012

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