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

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  • Rosa Aisa
  • Fernando Pueyo

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. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Rosa Aisa & Fernando Pueyo, 2013. "Population aging, health care, and growth: a comment on the effects of capital accumulation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1285-1301, October.
    • Handle: RePEc:spr:jopoec:v:26:y:2013:i:4:p:1285-1301
    DOI: 10.1007/s00148-012-0448-2
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    References listed on IDEAS

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    1. Klaus Prettner, 2013. "Population aging and endogenous economic growth," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 811-834, April.
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    14. David E. Bloom & David Canning & Günther Fink, 2014. "Disease and Development Revisited," Journal of Political Economy, University of Chicago Press, vol. 122(6), pages 1355-1366.
    15. Edwards, Sebastian, 1996. "Why are Latin America's savings rates so low? An international comparative analysis," Journal of Development Economics, Elsevier, vol. 51(1), pages 5-44, October.
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    17. Goldberger, Arthur S, 1973. "Dependency Rates and Savings Rates: Further Comment," American Economic Review, American Economic Association, vol. 63(1), pages 232-233, March.
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    Cited by:

    1. Luca Marchiori & Olivier Pierrard, 2023. "Health subsidies, prevention and welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(6), pages 1304-1336, December.
    2. Kuhn, Michael & Prettner, Klaus, 2016. "Growth and welfare effects of health care in knowledge-based economies," Journal of Health Economics, Elsevier, vol. 46(C), pages 100-119.
    3. Kawagishi, Taketo & Nakamoto, Yasuhiro, 2016. "Dynamic Analysis of Health Status in a Small Open Economy," MPRA Paper 73859, University Library of Munich, Germany.
    4. Wei Gao & Chengliang Yan & Fuyang Zhao, 2021. "Longevity, Grandparents Caring, and PAYG Pensions," Annals of Economics and Finance, Society for AEF, vol. 22(2), pages 451-465, November.
    5. repec:dau:papers:123456789/12130 is not listed on IDEAS
    6. Masaya Yasuoka, 2019. "Elderly care service in an aging society," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(1), pages 18-34, January.
    7. Alex Zhavoronkov & Maria Litovchenko, 2013. "Biomedical Progress Rates as New Parameters for Models of Economic Growth in Developed Countries," IJERPH, MDPI, vol. 10(11), pages 1-17, November.
    8. El Mekkaoui de Freitas, Najat & Oliveira Martins, Joaquim, 2014. "Health, pension benefits and longevity: How they affect household savings?," The Journal of the Economics of Ageing, Elsevier, vol. 3(C), pages 21-28.
    9. Ademola Obafemi Young, 2018. "Economic Growth and Population Ageing in Nigeria: Innovation Accounting Techniques," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 11(4), pages 190-190, July.
    10. Yasuhiro Nakamoto & Taketo Kawagishi, 2021. "The Impacts of Temporary and Permanent Public Health Policies on HRQOL in a Small Open Economy," Sustainability, MDPI, vol. 13(17), pages 1-33, September.
    11. Lim Kyoung Mook, 2016. "Public provision of health insurance and welfare," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(2), pages 439-483, June.
    12. Chia‐Hui Lu, 2023. "The macroeconomic impact of automation: Applications to elderly care," Contemporary Economic Policy, Western Economic Association International, vol. 41(4), pages 674-695, October.

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    More about this item

    Keywords

    Longevity; Population aging; Health workforce; Growth; O41; J14;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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