Journal of Population Economics

, Volume 26, Issue 4, pp 1285–1301

Population aging, health care, and growth: a comment on the effects of capital accumulation

Original Paper

Abstract

In a recent paper, Hashimoto and Tabata (J Popul Econ 23:571–593, 2010) present a theoretical model in which the increase in the rate of dependence due to aging of the population leads to a reallocation of labor from non-health to health production and, as a consequence, to a decline in economic growth. We argue that these results rely heavily on assumptions of a “small economy” and perfect capital mobility, which tie down the amount of capital. In this paper, we proceed by analyzing the case of an economy in which the availability of capital is endogenously determined by domestic savings. We find that the new “capital accumulation effect” is opposite to the previous “dependency rate effect,” leaving the effect on economic growth ambiguous. In particular, if the former prevailed, population aging would foster economic growth, a result that finds support in recent empirical work.

Keywords

Longevity Population aging Health workforce Growth 

JEL Classification

O41 J14 

References

  1. Acemoglu D, Johnson S (2007) Disease and development: the effect of life expectancy on economic growth. J Polit Econ 115(6):925–985CrossRefGoogle Scholar
  2. Acemoglu D, Johnson S (2009) Disease and development: a reply to Bloom, Canning, and Fink. Working paper, http://econ-www.mit.edu/files/4491
  3. Adams N (1971) Dependency rates and saving rates: comments. Am Econ Rev 61:472–475Google Scholar
  4. Bloom D, Canning D, Sevilla J (2004) The effect of health on economic growth: a production function approach. World Dev 32(1):1–13CrossRefGoogle Scholar
  5. Bloom DE, Canning D, Fink G (2009) Disease and development revisited. NBER Working Paper 15137Google Scholar
  6. Bloom DE, Canning D, Fink G (2011) Implications of population ageing for economic growth. Oxf Rev Econ Policy 26(4):583–612CrossRefGoogle Scholar
  7. Edwards S (1996) Why are Latin America’s saving rates so low? An international comparative analysis. J Dev Econ 51:5–44CrossRefGoogle Scholar
  8. Goldberger AS (1973) Dependency rates and saving rates: comment. Am Econ Rev 63:232–233Google Scholar
  9. Gupta KL (1971) Dependency rates and saving rates: comment. Am Econ Rev 61:469–471Google Scholar
  10. Hashimoto K, Tabata K (2010) Population aging, health care, and growth. J Popul Econ 23:571–593CrossRefGoogle Scholar
  11. Li H, Zhang J, Zhang J (2007) Effects of longevity and dependency rates on saving and growth: evidence from a panel of cross countries. J Dev Econ 84:138–154CrossRefGoogle Scholar
  12. Lindh T, Malmberg B (2009) European Union economic growth and the age structure of the population. Econ Change Restruct 42:159–187CrossRefGoogle Scholar
  13. Mullan F (2005) The metrics of the physician brain drain. N Engl J Med 353:1810–1818CrossRefGoogle Scholar
  14. Newhouse JP (1992) Medical care costs: how much welfare loss? J Econ Perspect 6(3):3–21CrossRefGoogle Scholar
  15. Prettner K (2012) Population aging and endogenous economic growth. J Popul Econ. doi:10.1007/s00148-012-0441-9 Google Scholar
  16. Ram R (1982) Dependency rates and aggregate savings: a new international cross-section study. Am Econ Rev 72:537–544Google Scholar
  17. Ram R (1984) Dependency rates and aggregate savings: reply. Am Econ Rev 74:234–237Google Scholar
  18. Reinhart VR (1999) Death and taxes: their implications for endogenous growth. Econ Lett 92:339–345CrossRefGoogle Scholar
  19. Sala-i-Martin X, Doppelhofer G, Miller R (2004) Determinants of long-term growth: a Bayesian averaging of classical estimates (BACE) approach. Am Econ Rev 94:813–835CrossRefGoogle Scholar
  20. Varvarigos D, Zakaria IZ (2012) Endogenous fertility in a growth model with public and private health expenditures. J Popul Econ. doi:10.1007/s00148-012-0412-1
  21. Weil DN (2007) Accounting for the effect of health on economic growth. Q J Econ 122(3):1265–1306CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2012

Authors and Affiliations

  1. 1.Facultad de Economía y EmpresaUniversidad de ZaragozaZaragozaSpain

Personalised recommendations