Declining fertility and economic well-being: do education and health ride to the rescue?

It is widely argued that declining fertility slows the pace of economic growth through its negative effect on labor supply. There are, however, theoretical arguments suggesting that the effect of falling fertility on effective labor supply can be offset by the associated behavioral changes. We formalize these arguments by setting forth a dynamic consumer optimization model that incorporates endogenous fertility as well as endogenous educational and health investments. The model shows that a fertility decline induces higher education and health investments that are able to compensate for declining fertility under certain circumstances. We assess the theoretical implications by investigating panel data for 118 countries over the period 1980 to 2005 and show that behavioral changes partly mitigate the negative impact of declining fertility on effective labor supply.demographic change, effective labor supply, human capital,population health, economic growth

Automation, stagnation, and the implications of a robot tax

We assess the long-run growth effects of automation in the overlapping generations framework. Although automation implies constant returns to capital and, thus, an AK production side of the economy, positive long-run growth does not emerge. The reason is that automation suppresses wage income, which is the only source of investment in the overlapping generations model. Our result stands in sharp contrast to the representative agent setting with automation, where sustained long-run growth is possible even without technological progress. Our analysis therefore provides a cautionary tale that the underlying modeling structure of saving/investment decisions matters for the derived economic impact of automation. In addition, we show that a robot tax has the potential to raise per capita output and welfare at the steady state. However, it cannot induce a takeoff toward positive long-run growth.info:eu-repo/semantics/acceptedVersio

The contribution of female health to economic development

We analyze the economic consequences for less developed countries of investing in female health. We do this through developing and calibrating a novel micro-founded dynamic general equilibrium model in which parents trade off the number of children against investments in their education and in which we allow for health-related gender differences in productivity. We show that better female health speeds up the demographic transition and thereby the take-off toward sustained economic growth. By contrast, male health improvements delay the transition and take-off because ceteris paribus they raise fertility. Investing in female health is therefore a potent lever for promoting development

Revisiting the Lucas model

We revisit the influential economic growth by Lucas(1988) ["On the mechanics of economic development." Journal of Monetary Econmomics, 22(1):3-42], assuming that households optimally allocate consumption and education over the life-cycle given an exogenous interst rate and exogenous wages. We show that in such a partial equilibrium setting, the original two-state (physical capital and human capital) optimization problem can be decomposed into two single-state optimal control models. This transformation allows us to rigorously prove the existence of a singular control describing the allocation of education time along a balanced growth path. We derive a constructive condition for a singular control to exist and show that under this condition definitely many singular controls are optimal in the individual household problem. In contrast to the original general equilibrium framework in which an agent always chooses part-time education and part-time work, in our framework such an agent might find it optimal tp allocate her whole available time to education at the beginning of her life and to focus on labor supply only when she is older

Going beyond GDP with a parsimonious indicator : inequality-adjusted healthy lifetime income

Per capita GDP has limited use as a well-being indicator because it does not capture many dimensions that imply a good life, such as health and equality of opportunity. However, per capita GDP has the virtues of easy interpretation and can be calculated with manageable data requirements. Against this backdrop, a need exists for a measure of well-being that preserves the advantages of per capita GDP, but also includes health and equality. We propose a new parsimonious indicator to fill this gap and calculate it for 149 countries

The macroeconomic burden of noncommunicable diseases in the United States: Estimates and projections

We develop and calibrate a dynamic production function model to assess how noncommunicable diseases (NCDs) will affect U.S. productive capacity in 2015-2050. In this framework, aggregate output is produced according to a human capital-augmented production function that accounts for the effects of projected disease prevalence. NCDs influence the economy through the following pathways: 1) when working-age individuals die of a disease, aggregate output undergoes a direct loss because physical capital can only partially substitute for the loss of human capital in the production process. 2) If working-age individuals suffer from a disease but do not die from it, then, depending on the condition's severity, they tend to be less productive, might work less, or might retire earlier. 3) Current NCD interventions such as medical treatments and prevention require substantial resources. Part of these resources could otherwise be used for productive investments in infrastructure, education, or research and development. This implies a loss of savings across the population and hampers economy-wide physical capital accumulation. Our results indicate a total loss of USD94.9 trillion (in constant 2010 USD) due to all NCDs. Mental health conditions and cardiovascular diseases impose the highest burdens, followed by cancer, diabetes, and chronic respiratory diseases. In per capita terms, the economic burden of all NCDs in 2015-2050 is USD265,000. The total NCD burden roughly corresponds to an annual tax rate of 10.8% on aggregate income

COVID-19 and climate: global evidence from 117 countries

Visual inspection of world maps shows that coronavirus disease 2019 (COVID-19) is less prevalent in countries closer to the equator, where heat and humidity tend to be higher. Scientists disagree how to interpret this observation because the relationship between COVID-19 and climatic conditions may be confounded by many factors. We regressconfirmed COVID-19 cases 5per million inhabitants in a country against the country’s distance from the equator, controlling key confounding factors: air travel, distance to Wuhan, testing intensity, cell phone usage, vehicle concentration, urbanization, and income. A one-degree increase in absolute latitude is associated with a 2.6% increase in cases per million inhabitants (p value <0.001). The Northern hemisphere may see a decline in new COVID-19 cases during summer and aresurgence during winter. One Sentence Summary: An increase in absolute latitude by onedegree is associated with a 2.6% increase in COVID-19 cases per million inhabitants after controlling for several important factors

Heterogeneous consumption in OLG model with horizontal innovations

The paper develops a general equilibrium endogenous growth model involving heterogeneous consumption by an age-structured population with uncertain but limited life span and balanced life-time budget without bequests. The heterogeneity is introduced via weights which the individuals attribute in their utility function to consumption of different goods depending on the vintage of the good. The goods are produced by monopolistically competitive firms and the variety of available goods/technologies is determined endogenously through R&D investments. A competitive bank sector provides financial resources for investments, secured by agents’ savings and future firms profits. The general equilibrium is characterized by a system of functional equations and is analytically or numerically determined for several particular weight functions. It is shown that the investments by agents alone may be insufficient to sustain growth, while additional investments provided by the bank sector may lead to growth. The resulting imbalance between agents’ assets and the total value of firms can grow unboundedly in the case of homogeneous consumption. The results exhibit the qualitative difference between the dynamics of the model with heterogeneous versus homogeneous consumption. In particular heterogeneous con- sumption (when old goods are discounted) reduces the additional investments by the financial sector so that the values of firms become balanced by the assets of agents in the long run.info:eu-repo/semantics/publishedVersio