Public and Private Expenditures on Health in a Growth Model

This paper introduces endogenous longevity in an otherwise standard overlapping generations model with capital. In the model, a young agent may increase the length of her old age by incurring investments in health funded from her wage income. Such private health investments are assumed to be more "productive" if accompanied by complementary tax-financed public health programs. The presence of such a complementary public input in private longevity is shown to expose the economy to aggregate endogenous fluctuations and even chaos, and such volatility is impossible in its absence. In particular, the model is capable of generating dramatic reversals in life expectancy as has been observed in many countries.chaos; longevity; public health

Endogenous lifetime and economic growth revisited

Chakraborty [Journal of Economic Theory, 2004] introduces endogenous mortality in a two period overlapping generations model by postulating that the probability of surviving from the first period to the second depends on tax-funded public health. His central result on the existence of multiple steady states (including development traps) summarized in Proposition 1 is incorrect. This paper presents the correct proposition and its proof, and in the process, uncovers several new, interesting results. Contrary to Chakraborty's analysis, high mortality yet high capital nations may not be able to escape the poverty trap. Interestingly, TFP growth can help economies escape the vicious cycle of poverty.

Three essays in macroeconomics

This dissertation is concentrated on two different economic topics: unemployment insurance (UI) and longevity. The first two chapters examine how a government UI program affects individuals\u27 behavior and the labor market performance. The last chapter investigates the role of the interaction between public health expenditure and private health investment in promoting a longer lifetime span.;In the first chapter, I study the effects of a publicly funded unemployment insurance (UI) system on a firm\u27s decision to terminate employment contracts in a dynamic moral hazard model. It is shown that the optimal employment contract involves termination of both sufficiently rich (too rich to motivate with compensation) and sufficiently poor (too poor to punish) workers. Unemployment insurance, by reducing the termination cost to firms, reduces the cutoff wealth level at which it becomes optimal to fire workers. When calibrated to the U.S. data, the model suggests that the presence of an unemployment insurance system may cause more job terminations but may also reduce the unemployment rate. While consumption of unemployed agents is shown to be changed little, aggregate welfare of all workers is reduced. The upshot is that a firm that offers long-horizon employment contracts can provide substantial consumption insurance and a publicly funded UI system would only crowd out the firm\u27s insurance provision.;The second chapter evaluates the effects of the current unemployment insurance (UI) program in a model where agents are able to borrow and lend, and the government holds an unemployment insurance trust fund (UITF) balance. The only borrowing constraint in this economy is that an agent\u27s consumption must be non-negative. It appears that the current positive UITF balance improves the welfare by 0.65%, relative to the economy with a UITF balance of 0 and yet the existing UI program is still available. In addition, removing the current UI program from the economy improves the welfare by 1.79%, which suggests that the public UI program may not be needed when agents are able to smooth consumptions by borrowing.;The last chapter introduces endogenous longevity in an otherwise standard overlapping generations model with capital. In the model, a young agent may increase the length of her old age by incurring investments in health funded from her wage income. Such private health investments are assumed to be more productive\u27\u27 if accompanied by complementary tax-financed public health programs. The presence of such a complementary public input in private longevity is shown to expose the economy to aggregate endogenous fluctuations and even chaos, and such volatility is impossible in its absence

Unsafe Sex, AIDS, and Development

Much of Africa has been ravaged by the AIDS epidemic. There, heterosexual contact is the primary mode of transmission for the HIV virus. Even when access to condoms is good and their price low, a large fraction of young Africans continue to engage in unprotected sex. In this paper, we propose a simple two period rational model of sexual behavior that has the potential to explain why a large proportion of sexual activity in poor countries maybe unprotected. In the model economy, even when agents are perfectly cognizant of the risk involved in unsafe sexual activity, and fully internalize the effects of their own sexual behavior on their chance of catching the virus, they may rationally choose to engage in such risky behavior. Our results indicate that safe sexual practice is essentially a "normal good" and that development may be key to reducing HIV infectivity.AIDS; rational choice; sexual behavior; safe sex

Public and private expenditures on health in a growth model

This paper introduces endogenous longevity into an otherwise standard overlapping generations model with capital. In the model, a young agent may increase the length of her old age by incurring investments in health. Such private health investments are assumed to be more ‘productive’ if accompanied by complementary tax-financed public health programs. The presence of the public input in private longevity is shown to expose the economy to aggregate endogenous fluctuations and even chaos, and such volatility is impossible in its absence. The model is capable of generating dramatic reversals in life expectancy as has been observed in many countries

Public and private expenditures on health in a growth model

This paper introduces endogenous longevity in an otherwise standard overlapping generations model with capital. In the model, a young agent may increase the length of her old age by incurring investments in health funded from her wage income. Such private health investments are assumed to be more productive if accompanied by complementary tax-financed public health programs. The presence of such a complementary public input in private longevity is shown to expose the economy to aggregate endogenous fluctuations and even chaos, and such volatility is impossible in its absence. In particular, the model is capable of generating dramatic reversals in life expectancy as has been observed in many countries