Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Intergenerational Linkages, Uncertain Lifetime and Educational and Health Expenditures

Intergenerational Linkages, Uncertain Lifetime and Educational and Health Expenditures AbstractEmpirical evidence suggests a positive correlation between health and educational outcomes at the aggregate level. However, both inter and intra-country data suggest that these variables may not always be monotonically increasing in income, pointing towards household income as a possible mitigating factor in the relationship between health and education expenditures and outcomes. We develop an overlapping generations model where agents spend their childhood studying, undertake expenditures to educate their offspring and health expenditures to improve their own longevity in adult age, and spend old age in retirement. Our model is characterised by two equilibria. In one equilibrium, longevity enhancing health expenditure is an inferior good, resulting in agents substituting health expenditures in favour of education expenditures on offspring as their income increases. In the other equilibrium, health expenditure is a normal good, but for incomes below a certain level, an increase in income causes agents to raise health expenditures whilst lowering education expenditures on offspring, while for incomes above this level all expenditures are increasing in income. These results suggest that the relationship between parental longevity and offspring’s human capital depends on income and whether agents consider longevity enhancing health expenditure to be an inferior or normal good. Dynamics of the model show that the economy could either achieve unbounded growth or converge towards a lower bound of income in the long run. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The B E Journal of Macroeconomics de Gruyter

Intergenerational Linkages, Uncertain Lifetime and Educational and Health Expenditures

Download PDF
21 pages

Loading next page...
 
/lp/de-gruyter/intergenerational-linkages-uncertain-lifetime-and-educational-and-pYOvUK2b0j

References

References for this paper are not available at this time. We will be adding them shortly, thank you for your patience.

Publisher
de Gruyter
Copyright
© 2022 Walter de Gruyter GmbH, Berlin/Boston
ISSN
1935-1690
eISSN
1935-1690
DOI
10.1515/bejm-2021-0095
Publisher site
See Article on Publisher Site

Abstract

AbstractEmpirical evidence suggests a positive correlation between health and educational outcomes at the aggregate level. However, both inter and intra-country data suggest that these variables may not always be monotonically increasing in income, pointing towards household income as a possible mitigating factor in the relationship between health and education expenditures and outcomes. We develop an overlapping generations model where agents spend their childhood studying, undertake expenditures to educate their offspring and health expenditures to improve their own longevity in adult age, and spend old age in retirement. Our model is characterised by two equilibria. In one equilibrium, longevity enhancing health expenditure is an inferior good, resulting in agents substituting health expenditures in favour of education expenditures on offspring as their income increases. In the other equilibrium, health expenditure is a normal good, but for incomes below a certain level, an increase in income causes agents to raise health expenditures whilst lowering education expenditures on offspring, while for incomes above this level all expenditures are increasing in income. These results suggest that the relationship between parental longevity and offspring’s human capital depends on income and whether agents consider longevity enhancing health expenditure to be an inferior or normal good. Dynamics of the model show that the economy could either achieve unbounded growth or converge towards a lower bound of income in the long run.

Journal

The B E Journal of Macroeconomics – de Gruyter

Published: Jan 1, 2023

Keywords: health expenditures; longevity; education expenditures; human capital; E24; J24; I14; I24

There are no references for this article.