Abstract
This paper investigates the hypothesis that the causal effect of life expectancy on income per capita growth is non-monotonic. This hypothesis follows from the recent literature on unified growth, in which the demographic transition represents an important turning point for population dynamics and hence plays a central role for the transition from stagnation to growth. Results from different empirical specifications and identification strategies document that the effect is non-monotonic, negative (but often insignificant) before the onset of the demographic transition, but strongly positive after its onset. The results provide a new interpretation of the contradictory existing evidence and have relevant policy implications.
Similar content being viewed by others
References
Acemoglu D., Johnson S. (2007) Disease and development: The effect of life expectancy on economic growth. Journal of Political Economy 115(6): 925–985
Aghion P., Howitt P., Murtin F. (2011) The relationship between health and growth: When Lucas meets Nelson-Phelps. Review of Economics and Institutions 2(1): 1–24
Ashraf, Q. H., Lester, A., & Weil, D. N. (2008). When does improving health raise GDP? In D. Acemoglu, K. Rogoff, & M. Woodford (Eds.), NBER macroeconomics annual (Vol. 23, pp. 157f́b-204). Chicago: University of Chicago Press.
Bar M., Leukhina O. (2010) Demographic transition and industrial revolution: A macroeconomic investigation. Review of Economic Dynamics 13(2): 424–451
Bar M., Leukhina O. (2011) The role of adult mortality in the transmission of knowledge. Journal of Economic Growth 15(4): 291–321
Becker G.S., Philipson T.J., Soares R.R. (2005) The quantity and quality of life and the evolution of world inequality. American Economic Review 95(1): 277–291
Blackburn K., Cipriani G.P. (2002) A model of longevity, fertility and growth. Journal of Economic Dynamics and Control 26: 187–204
Bleakley H., Lange F. (2009) Chronic disease burden and the interaction of education, fertility, and growth. Review of Economics and Statistics 91(1): 52–65
Blinder A. S. (1973) Wage discrimination: Reduced form and structural variables. Journal of Human Resources 8: 436–455
Bloom, D. E., Canning, D., & Fink, G. (2009). Disease and development revisited NBER Working Paper No. 15137.
Bloom D. E., Canning D., Fink G., Finlay J. E. (2009) Fertility, female labor force participation, and the demographic dividend. Journal of Economic Growth 14(1): 71–101
Bloom D. E., Canning D., Sevilla J. (2003) The demographic dividend. RAND, Santa Monica
Bloom D. E., Sachs J. D. (1998) Geography, demography, and economic growth in Africa. Brookings Papers on Economic Activity 2: 207–273
Boldrin M., Jones L.E. (2002) Mortality, fertility, and saving in a Malthusian economy. Review of Economic Dynamics 5(4): 775–814
Boucekkine R., de la Croix D., Licandro O. (2002) Vintage human capital, demographic trends, and endogenous growth. Journal of Economic Theory 104(2): 340–375
Boucekkine R., de la Croix D., Licandro O. (2003) Early mortality declines at the dawn of modern growth. Scandinavian Journal of Economics 105: 401–418
Carr-Saunders A. (1936) World population: Past growth and present trends. Claredon University Press, Oxford
Cervellati M., Sunde U. (2005) Human capital, life expectancy, and the process of development. American Economic Review 95(5): 1653–1672
Cervellati, M., Sunde, U. (2007). Human capital, mortality and fertility: A unified theory of the economic and demographic transition. IZA Discussion Paper No. 2905.
Chesnais J.-C. (1992) The demographic transition: Stages, patterns and economic implications, a longitudinal study of sixty-seven countries covering the period 1720–1984. Clarendon Press, Oxford
de la Croix D., Licandro O. (1999) Life expectancy and endogenous growth. Economics Letters 65: 255–263
de la Croix, D., & Licandro, O. (2007). The father of child is father of man: Implications for the demographic transition. EUI Florence: Mimeo.
Elder Todd E., J. H. G., Haider S. J. (2010) Unexplained gaps and oaxaca-blinder decompositions. Labour Economics 17(1): 284–290
Falcão B. L., Soares R. R. (2008) The demographic transition and the sexual division of labor. Journal of Political Economy 116(6): 1058–1104
Gallup J. L., Sachs J. D., Mellinger A. D. (1999) Geography and economic development. International Regional Science Review 22(2): 179–232
Galor O. (2005) From stagnation to growth: Unified growth theory. In: Aghion P., Durlauf S. (eds) Handbook of economic growth (Chap. 4). Elsevier, Amsterdam
Galor O. (2010) Comparative economic development: Insights from unified growth theory. International Economic Review 51(1): 1–44
Galor O., Moav O. (2002) Natural selection and the origin of economic growth. Quarterly Journal of Economics 117(4): 1133–1192
Galor O., Weil D. N. (1996) The gender gap, fertility and growth. American Economic Review 86(3): 374–387
Galor O., Weil D. N. (2000) Population, technology, and growth: From malthusian stagnation to the demographic transition and beyond. American Economic Review 90(4): 806–828
Jayachandran S., Lleras-Muney A. (2009) Life expectancy and human capital investments: Evidence from maternal mortality declines. Quarterly Journal Economics 124(1): 349–398
Juhn C., Murphy K. M., Pierce B. (1993) Wage inequality and the rise in returns to skill. Journal of Political Economy 101(3): 410–442
Kalemli-Ozcan S. (2002) Does mortality decline promote economic growth?. Journal of Economic Growth 7(4): 411–439
Kalemli-Ozcan S. (2003) A stochastic model of mortality, fertility, and human capital investment. Journal of Development Economics 70(1): 103–118
Kalemli-Ozcan S., Ryder H.E., Weil D.N. (2000) Mortality decline, human capital investment, and economic growth. Journal of Development Economics 62: 1–23
Kirk D. (1996) Demographic transition theory. Population Studies 50: 361–387
Lagerlöf N.-P. (2003) From malthus to modern growth: Can epidemics explain the three regimes?. International Economic Review 44(2): 755–777
Landry A. (1934) La revolution demographique. Sirey, Paris
Lee R. (2003) The demographic transition: Three centuries of fundamental change. Journal of Economic Perspectives 17(4): 167–190
Livi-Bacci M. (1992) A concise history of world population. Blackwell, Oxford
Lorentzen P., McMillan J., Wacziarg R. (2008) Death and development. Journal of Economic Growth 13(2): 81–124
Maddison A. (2003) The eorld economy: Historical statistics. OECD Development Centre, Paris
Murphy K.M., Topel R. H. (2006) The value of health and longevity. Journal of Political Economy 114(5): 871–904
Notestein, F. (1945). Population: The long view. In T. Schultz (Ed.), Food for the world. Chicago, USA: Chicago University Press.
Oaxaca R. (1973) Male-female wage differentials in urban labor markets. International Economic Review 14: 693–709
Pesaran M., Taylor L. (1999) Diagnostics for IV regressions. Oxford Bulletin of Economics and Statistics 61: 255–281
Preston S. H., Heuveline P., Guillot M. (2001) Demography: Measuring and modeling population processes. Blackwell, Oxford
Reher D. S. (2004) The demographic transition revisited as a global process. Population, Space and Place 10(1): 19–41
Sachs J. D., Kiszewski A., D. M. A., Spielmann A., Malaney P., Ehrlich S. (2004) A global index of the stability of malaria transmission. American Journal of Tropical Medicine and Hygiene 70(5): 486–498
Shastry G. K., Weil D. (2003) How much of the cross-country variation in income is explained by health?. Journal of the European Economic Association 1(2–3): 387–396
Soares R. (2005) Mortality reductions, educational attainment, and fertility choice. American Economic Review 95(3): 580–601
Strulik H. (2008) Geography, health and the pace of demo-economic development. Journal of Development Economics 86(1): 61–75
Thompson W. S. (1929) Population. American Journal of Sociology 34: 959–975
UN: (1983) United nations, manual X: Indirect techniques for demographic estimation. United Nations, New York
Weil D. N. (2007) Accounting for the effect of health on economic growth. Quarterly Journal of Economics 122(3): 1265–1306
Weil D., Wilde J. (2009) How relevant is Malthus for economic development today?. American Economic Review 99(2): 255–260
Wooldridge J. M. (2002) Econometric analysis of cross-section and panel data. MIT Press, Cambridge, MA
Author information
Authors and Affiliations
Corresponding author
Electronic Supplementary Material
The Below is the Electronic Supplementary Material.
Rights and permissions
About this article
Cite this article
Cervellati, M., Sunde, U. Life expectancy and economic growth: the role of the demographic transition. J Econ Growth 16, 99–133 (2011). https://doi.org/10.1007/s10887-011-9065-2
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10887-011-9065-2
Keywords
- Life expectancy
- Income growth
- Demographic transition
- Population growth
- Fertility
- Unified growth theories
- Non-Linear dynamics
- Non-monotocities
- IV estimates
- Epidemiological revolution