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Life Insurance, Human Capital Accumulation and Economic Growth
Author(s) -
Lu Chen,
Yanagihara Mitsuyoshi
Publication year - 2013
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.12007
Subject(s) - life insurance , economics , human capital , investment (military) , capital accumulation , productivity , labour economics , demographic economics , actuarial science , economic growth , politics , political science , law
We compare growth rates in the absence and presence of life insurance using an overlapping generations framework with human capital accumulation to clarify how life insurance contributes to economic growth through the education investment of individuals depending on economic circumstances. Our results show that, as expected, the growth rate is higher when there is life insurance if the rate of time preference or the productivity of human capital accumulation is sufficiently low and if the income loss induced from lifetime uncertainty is moderate. However, if the income loss is sufficiently large, the growth rate is lower when there is life insurance.