Date: 2008
Type: Working Paper
Population Aging and Economic Growth: The Effect of Health Expenditure
Working Paper, EUI ECO, 2008/35
MIZUSHIMA, Atsue, Population Aging and Economic Growth: The Effect of Health Expenditure, EUI ECO, 2008/35 - https://hdl.handle.net/1814/9814
Retrieved from Cadmus, EUI Research Repository
Rising longevity has led to population aging in developed countries, causing increasing concerns about its economic impact. Specially, the trend of population aging increases health expenditure in developed countries, and 70% to 80% of health expenditure is funded by public sector. Therefore, this paper focuses on the health demand in an aging economy and examines how the aging of the population and public health funding (PHF) affects agents' behavior. For this purpose, we construct a simple growth model and examine the effect of aging and PHF on saving and the growth rate. We show that an increase in life expectancy increases the growth rate in the economy without PHF, but that it has an inverted U-shaped relation in the economy with PHF. From the welfare standpoint, we show that it increases the intergenerational conflict between current and future generation and that PHF has the result of alleviating the conflict.
Cadmus permanent link: https://hdl.handle.net/1814/9814
ISSN: 1725-6704
Series/Number: EUI ECO; 2008/35
Publisher: European University Institute