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HEALTH, EDUCATION, AND LIFE CYCLE SAVINGS IN THE DEVELOPMENT PROCESS
Author(s) -
TANG KAM KI,
ZHANG JIE
Publication year - 2007
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2007.00020.x
Subject(s) - life expectancy , investment (military) , economics , subsidy , human capital , welfare , overlapping generations model , capital accumulation , labour economics , economic growth , market economy , environmental health , population , politics , political science , law , medicine
This paper studies investment in health and human capital in a life cycle model. Health investment enhances survival to old age by improving health from its endowed level. The model predicts two distinctive phases of development. When income is low enough, the economy has no health investment and little savings, leading to slow growth. When income grows, health investment will become positive and the saving rate will rise, leading to higher life expectancy and faster growth. A health subsidy can move the economy from the first phase to the next. Subsidies on health and human capital investments can improve welfare. ( JEL I00, J10, H50, O10)