Podcast
Questions and Answers
Within the context of the Ben-Porath model, how does increased longevity primarily influence an individual's decision regarding human capital investment?
Within the context of the Ben-Porath model, how does increased longevity primarily influence an individual's decision regarding human capital investment?
- It has no effect on human capital investment decisions.
- It shifts investment from education to direct market work, maximizing immediate earnings
- It encourages greater investment in human capital due to an extended period to recoup the investment. (correct)
- It decreases human capital investment due to a shorter time horizon for returns.
According to the research using data from U.S. cohorts of men born 1840-1970, what key aspect must be considered when evaluating the effect of longevity on lifetime labor supply, according to Hazan (2009)?
According to the research using data from U.S. cohorts of men born 1840-1970, what key aspect must be considered when evaluating the effect of longevity on lifetime labor supply, according to Hazan (2009)?
- The fluctuations in the stock market and their impact on retirement funds.
- The impact of technological advancements on job availability over time.
- The relative increase of benefits over costs associated with education expansions. (correct)
- The number of years spent in formal education, irrespective of labor market participation.
What critical assumption within the Ben-Porath model needs to be considered to reconcile the relationship between longevity and labor supply?
What critical assumption within the Ben-Porath model needs to be considered to reconcile the relationship between longevity and labor supply?
- Utilizing a realistic survival law and considering variations in the intensive margin of labor supply. (correct)
- Assuming that all individuals have equal access to education and healthcare.
- Ignoring variations in the intensity of labor supply.
- Assuming a constant retirement age across all cohorts.
How does the 'rectangularization' of the survival law, as referenced by Cervellati and Sunde (2013), conceptually alter the conventional understanding of longevity's impact on economic behavior?
How does the 'rectangularization' of the survival law, as referenced by Cervellati and Sunde (2013), conceptually alter the conventional understanding of longevity's impact on economic behavior?
If a government aims to increase both longevity and human capital investment, which policy would be the MOST effective based on the presented economic models?
If a government aims to increase both longevity and human capital investment, which policy would be the MOST effective based on the presented economic models?
What key factors determine the timing of the demographic transition according to the content?
What key factors determine the timing of the demographic transition according to the content?
Which of the following is the most accurate description of the economic development disparities observed globally?
Which of the following is the most accurate description of the economic development disparities observed globally?
How do demographic dynamics influence development and inequality?
How do demographic dynamics influence development and inequality?
Based on the data presented, which factor does not contribute significantly to disparities in economic development?
Based on the data presented, which factor does not contribute significantly to disparities in economic development?
Which of the following values represents a country with a relatively high level of democracy according to the Polity-V data?
Which of the following values represents a country with a relatively high level of democracy according to the Polity-V data?
What is a primary consequence of long-run economic growth that leads to discussions about institutional change?
What is a primary consequence of long-run economic growth that leads to discussions about institutional change?
What aspect of individual intertemporal decisions is most influenced by health and longevity?
What aspect of individual intertemporal decisions is most influenced by health and longevity?
If a country transitions from a fertility rate of 5.0 to 2.0, what broad implication might this demographic shift have, assuming other factors remain constant?
If a country transitions from a fertility rate of 5.0 to 2.0, what broad implication might this demographic shift have, assuming other factors remain constant?
How do inclusive institutions potentially foster economic development compared to extractive ones?
How do inclusive institutions potentially foster economic development compared to extractive ones?
Which of the following reflects evidence supporting the role of demographic transition timing, as indicated in the content?
Which of the following reflects evidence supporting the role of demographic transition timing, as indicated in the content?
Which 'global mega trend' is most likely to exacerbate existing inequalities if not properly addressed through policy and innovation?
Which 'global mega trend' is most likely to exacerbate existing inequalities if not properly addressed through policy and innovation?
What is a common theme in debates regarding the income-democracy nexus?
What is a common theme in debates regarding the income-democracy nexus?
According to the material, what is closely linked to heterogeneous demographics in the context of global development patterns?
According to the material, what is closely linked to heterogeneous demographics in the context of global development patterns?
Consider a country with low tertiary education rates and high fertility rates. What long-term economic challenges might it face compared to a country with high tertiary education and low fertility?
Consider a country with low tertiary education rates and high fertility rates. What long-term economic challenges might it face compared to a country with high tertiary education and low fertility?
How might democratic reversals impact a country's long-term economic development?
How might democratic reversals impact a country's long-term economic development?
In models of institutional change, what is the typical basis for these changes?
In models of institutional change, what is the typical basis for these changes?
According to Acemoglu and Johnson's research in the JPE 2007, what type of evidence regarding the relationship between life expectancy and economic growth did they find?
According to Acemoglu and Johnson's research in the JPE 2007, what type of evidence regarding the relationship between life expectancy and economic growth did they find?
In the Solow-type closed economy model, what does the parameter $\eta$ represent in the context of life expectancy and growth?
In the Solow-type closed economy model, what does the parameter $\eta$ represent in the context of life expectancy and growth?
In the Solow-type model, if an increase in life expectancy ($T$) leads to a decrease in population ($N$), while other factors remain constant, what would be the likely impact on income per capita, assuming $\alpha = 0.5$, $\theta = 0.2$, $\eta = 0.3$, and $\lambda = -0.1$?
In the Solow-type model, if an increase in life expectancy ($T$) leads to a decrease in population ($N$), while other factors remain constant, what would be the likely impact on income per capita, assuming $\alpha = 0.5$, $\theta = 0.2$, $\eta = 0.3$, and $\lambda = -0.1$?
Consider the equation $\ln y_t = \alpha \ln A_t + \alpha \ln h_t - (1 - \alpha) \ln N_t + B_t$. Which of the following best describes the implications of a higher $N_t$ (population) assuming $\alpha < 1$?
Consider the equation $\ln y_t = \alpha \ln A_t + \alpha \ln h_t - (1 - \alpha) \ln N_t + B_t$. Which of the following best describes the implications of a higher $N_t$ (population) assuming $\alpha < 1$?
In the context of the 2-way fixed effects model, what is the purpose of including $\zeta_i$ and $\mu_t$ in the equation $\ln y_{it} = \pi \ln T_t + \zeta_i + \mu_t + u_{it}$?
In the context of the 2-way fixed effects model, what is the purpose of including $\zeta_i$ and $\mu_t$ in the equation $\ln y_{it} = \pi \ln T_t + \zeta_i + \mu_t + u_{it}$?
Based on the data presented, what general trend is observed regarding the share of individuals with some formal education between 1960 and 2000?
Based on the data presented, what general trend is observed regarding the share of individuals with some formal education between 1960 and 2000?
According to the 'Preston Curve', what relationship is generally observed between life expectancy at birth and GDP per capita?
According to the 'Preston Curve', what relationship is generally observed between life expectancy at birth and GDP per capita?
How did the distribution of life expectancy at birth change between 1960 and 2000, according to the provided data?
How did the distribution of life expectancy at birth change between 1960 and 2000, according to the provided data?
What trend is evident in the distribution of child mortality rates between 1960 and 2000?
What trend is evident in the distribution of child mortality rates between 1960 and 2000?
Based on the provided information, how did the distribution of the share of skilled (educated) individuals change between 1960 and 2000?
Based on the provided information, how did the distribution of the share of skilled (educated) individuals change between 1960 and 2000?
What general trend is observed in the total (gross) fertility rate between 1960 and 2000?
What general trend is observed in the total (gross) fertility rate between 1960 and 2000?
How did the distribution of the net reproduction rate change between 1960 and 2000?
How did the distribution of the net reproduction rate change between 1960 and 2000?
What trend is observed in the distribution of income per capita between 1960 and 2000?
What trend is observed in the distribution of income per capita between 1960 and 2000?
Based on the presented 'facts' of long-run growth, which of the following is a characteristic of the model?
Based on the presented 'facts' of long-run growth, which of the following is a characteristic of the model?
How have increases in human capital affected the skill premium?
How have increases in human capital affected the skill premium?
How did the change in percentage with some formal education relate to life expectancy at birth, considering a lag of 20 years?
How did the change in percentage with some formal education relate to life expectancy at birth, considering a lag of 20 years?
What factor related to market dynamics substantially increased during the period studied?
What factor related to market dynamics substantially increased during the period studied?
What factor influences the variability in growth rates according to the long-run growth model?
What factor influences the variability in growth rates according to the long-run growth model?
In analyzing the change in the share of educated individuals over 40 years, what scenarios are considered in addition to the baseline model?
In analyzing the change in the share of educated individuals over 40 years, what scenarios are considered in addition to the baseline model?
What previously overlooked factor did Jones and Romer (2010) suggest is important to capture in formal models of economic growth?
What previously overlooked factor did Jones and Romer (2010) suggest is important to capture in formal models of economic growth?
According to the content, how does the effect of life expectancy on fertility change during the demographic transition?
According to the content, how does the effect of life expectancy on fertility change during the demographic transition?
What might be a reason for observing a non-monotonic effect of life expectancy on fertility?
What might be a reason for observing a non-monotonic effect of life expectancy on fertility?
Based on the figures provided, which of the following statements is most accurate regarding the relationship between changes in log life expectancy and changes in log population from 1940-1980?
Based on the figures provided, which of the following statements is most accurate regarding the relationship between changes in log life expectancy and changes in log population from 1940-1980?
Considering the graphs showing 'Change in Log GDP per capita 1940-1980,' what can be inferred about the relationship between life expectancy increases and economic growth?
Considering the graphs showing 'Change in Log GDP per capita 1940-1980,' what can be inferred about the relationship between life expectancy increases and economic growth?
Which of the following countries experienced both a substantial increase in life expectancy and a relatively modest increase in GDP per capita between 1940 and 1980, according to the provided figures?
Which of the following countries experienced both a substantial increase in life expectancy and a relatively modest increase in GDP per capita between 1940 and 1980, according to the provided figures?
Which of the following is a potential implication of the observed relationship between life expectancy and demographic transition for economic modeling?
Which of the following is a potential implication of the observed relationship between life expectancy and demographic transition for economic modeling?
Suppose a country implements policies that significantly increase life expectancy. Based on the documented demographic transition, what broader effects might one anticipate?
Suppose a country implements policies that significantly increase life expectancy. Based on the documented demographic transition, what broader effects might one anticipate?
Based on the graphical data, which region saw a notable rise in both life expectancy and GDP per capita from 1940 to 1980?
Based on the graphical data, which region saw a notable rise in both life expectancy and GDP per capita from 1940 to 1980?
Assuming that the observed trends from 1940-1980 hold in subsequent periods, how might a country in the early stages of demographic transition strategically leverage increased life expectancy for economic development?
Assuming that the observed trends from 1940-1980 hold in subsequent periods, how might a country in the early stages of demographic transition strategically leverage increased life expectancy for economic development?
What could be a plausible factor explaining why some countries, despite significant gains in life expectancy between 1940 and 1980, did not experience a corresponding boom in GDP per capita?
What could be a plausible factor explaining why some countries, despite significant gains in life expectancy between 1940 and 1980, did not experience a corresponding boom in GDP per capita?
If a researcher aims to predict future population growth in a developing country, how should they account for the relationship between life expectancy and fertility?
If a researcher aims to predict future population growth in a developing country, how should they account for the relationship between life expectancy and fertility?
How might rapid technological advancements in healthcare influence the demographic transition of a developing nation?
How might rapid technological advancements in healthcare influence the demographic transition of a developing nation?
Considering the potential for misspecification in empirical models, what step might researchers take to ensure the validity of their conclusions regarding life expectancy and demographic transition?
Considering the potential for misspecification in empirical models, what step might researchers take to ensure the validity of their conclusions regarding life expectancy and demographic transition?
In a country with a traditionally agrarian economy, how might increased life expectancy influence the rate of urbanization?
In a country with a traditionally agrarian economy, how might increased life expectancy influence the rate of urbanization?
How can governments use the understanding of the demographic transition to formulate better social and economic policies?
How can governments use the understanding of the demographic transition to formulate better social and economic policies?
Flashcards
Longevity and Education
Longevity and Education
Greater longevity is associated with more investment in education due to a relaxed time budget constraint.
Longevity and Labor Supply
Longevity and Labor Supply
Lifetime labor supply is affected by longevity. This is shown in data from US cohorts of men born from 1840-1970
Ben-Porath Model
Ben-Porath Model
A model where investing in human capital takes time away from market work, but greater longevity relaxes the time budget constraint, resulting in more education.
Education Expansions
Education Expansions
Lifetime labor supply isn't a necessary condition for education expansions, but the relative increase of benefits over costs drives it.
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Rectangularization of Survival
Rectangularization of Survival
The shape of the survival function changes over time, becoming more "rectangular," with people living closer to their maximum lifespan.
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Life Expectancy & Growth
Life Expectancy & Growth
Panel-IV studies show conflicting evidence on life expectancy's effect on economic growth.
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Solow-type Economy
Solow-type Economy
A closed economy model where output (Yt) depends on technology (At), human capital (Ht), and physical capital (Kt).
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Human Capital (Ht)
Human Capital (Ht)
Ht equals the product of average human capital (ht) and the number of people (Nt).
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Income per Capita Equation
Income per Capita Equation
Log income per capita (ln yt) is determined by technology (ln At), Education Levels (ln ht), population (ln Nt) and other exogenous variables.
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2-way FE Model
2-way FE Model
Two-way fixed effects model to estimate the impact of life expectancy (T) on income (y) across countries and time.
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What determines demographic transition timing?
What determines demographic transition timing?
Differences in extrinsic mortality and demand for human capital.
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How are inequality and institutional change linked?
How are inequality and institutional change linked?
Long-run growth leads to inequality dynamics, which influences institutional change.
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How do demographics influence development and inequality?
How do demographics influence development and inequality?
Health/longevity affects individual intertemporal decisions like education, while fertility and population dynamics affect the wage structure.
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Health/longevity determine which decisions?
Health/longevity determine which decisions?
Individual decisions about education are directly determined by their health and expected longevity.
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What does population affect?
What does population affect?
Population dynamics affect wage structure.
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What are global development patterns linked to?
What are global development patterns linked to?
Patterns of global development are closely linked to demographics.
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Does income cause democracy?
Does income cause democracy?
Income may or may not cause democracy.
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Does democracy cause growth?
Does democracy cause growth?
Democracy may or may not cause growth.
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VWL (Economics) Focus
VWL (Economics) Focus
The study of economics and its applications, particularly in the long run, focusing on areas like demographics.
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Disparities in Global Development
Disparities in Global Development
Significant differences exist worldwide in economic progress, demographic characteristics, health, education, and institutional quality.
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Income per capita
Income per capita
Measures the average income per person in a specific location, often used to compare economic prosperity of different regions or countries. Often denoted as income p.c.
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Life Expectancy
Life Expectancy
The average number of years a newborn is expected to live, based on current mortality rates.
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Tertiary Education Rate
Tertiary Education Rate
The percentage of the population that has completed tertiary (post-secondary) education.
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Fertility Rate
Fertility Rate
The average number of children a woman is expected to have in her lifetime.
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Democracy Score
Democracy Score
The extent to which a country's political system is democratic, as measured by the Polity score.
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Global Mega Trends
Global Mega Trends
Major shifts and trends affecting the world, including demographic changes, technological advancements, inequality, and potential democratic reversals.
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Demographic Transition
Demographic Transition
The shift from high birth and death rates to low birth and death rates as a country develops.
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Non-monotonic Effect
Non-monotonic Effect
Life expectancy's effect on fertility rates changes direction during the demographic transition.
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Positive Effect (Pre-Transition)
Positive Effect (Pre-Transition)
Before the demographic transition, higher life expectancy is associated with higher fertility rates.
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Negative Effect (Post-Transition)
Negative Effect (Post-Transition)
After the demographic transition, higher life expectancy is associated with lower fertility rates.
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Model Misspecification
Model Misspecification
A potential issue in empirical studies where the model used isn't correct, leading to biased results.
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Log Life Expectancy
Log Life Expectancy
Logarithmic transformation applied to life expectancy data.
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Log GDP per Capita
Log GDP per Capita
Logarithmic transformation applied to GDP per capita data.
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Log Population
Log Population
Logarithmic transformation of population data.
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GDP per Capita
GDP per Capita
Gross Domestic Product per person; a measure of economic output per capita.
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Life Expectancy vs. Population Plot
Life Expectancy vs. Population Plot
A graphical representation showing the relationship between changes in log life expectancy and log population.
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Life Expectancy vs. GDP Plot
Life Expectancy vs. GDP Plot
A graphical representation showing the relationship between changes in log life expectancy and log GDP per capita.
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Pre-Transitional Fitted Line
Pre-Transitional Fitted Line
The fitted line represents the trend or relationship between variables before the demographic transition.
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Post-Transitional Fitted Line
Post-Transitional Fitted Line
The fitted line represents the trend or relationship between variables after the demographic transition.
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Early Transition Countries
Early Transition Countries
Countries that experienced demographic transition earlier.
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Late Transition Countries
Late Transition Countries
Countries that experienced demographic transition later.
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Preston Curve
Preston Curve
The correlation between life expectancy and income per capita across countries.
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Increase in Human Capital
Increase in Human Capital
Increase in average years of schooling and overall educational attainment in a population.
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Skill Premium
Skill Premium
The additional earnings or benefits a skilled worker receives compared to an unskilled worker.
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Secular Acceleration
Secular Acceleration
Growth that transitions from slow or no progress to consistent and rapid advancement.
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Cross-Country Differences
Cross-Country Differences
Differences in income and productivity levels between rich and poor countries.
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Growth Variability
Growth Variability
The risk of economic instability tends to be higher further from leading economies.
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Market Extent (Impact)
Market Extent (Impact)
Population size, international trade, and the growth of cities enhance economic activity.
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Population Aging
Population Aging
Population aging affects various aspects of society, including economic growth.
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Quasi-Stagnation
Quasi-Stagnation
A state of little or no economic growth over an extended period.
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Child Mortality
Child Mortality
The number of children who die before reaching a certain age (usually 5 years).
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Gross Fertility Rate
Gross Fertility Rate
The average number of children a woman would have if she lived to the end of her childbearing years.
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Net Reproduction Rate
Net Reproduction Rate
The number of daughters a woman will have who survive to childbearing age.
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Globalization
Globalization
The level of integration and interaction among people worldwide
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Urbanization
Urbanization
The process of shifting from rural to urban living.
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- Substantial disparities exist in economic development, demographics, and institutions worldwide.
- Demographics include health, life expectancy, education, and fertility.
- Institutions encompass democracy, rule of law, and inclusive versus extractive systems.
Global Inequality: Income p.c.
- Income per capita data from PWT 9.1, Year: 2010, reveals global disparities.
- Income ranges:
- (6457.12, 52301.6]
- (2288.45, 6457.12]
- (609.744, 2288.45]
- [103.776, 609.744]
- No data
Global Inequality: Life Expectancy
- Life expectancy data from the World Bank, Year: 2010, illustrates global disparities.
- (76.25767, 82.84268]
- (72.051, 76.25767]
- (63.558, 72.051]
- [45.596, 63.558]
- No data
Global Inequality: Education (tertiary)
- Barro-Lee data, Year: 2010, highlights global disparities in tertiary education.
- (18.3, 55.8]
- (10.0, 18.3]
- (3.6, 10.0]
- [0.2, 3.6]
- No data
Global Inequality: Fertility
- World Bank data on Total Fertility Rate, Year: 2010, shows global disparities in fertility.
- (4.0875, 7.485]
- (2.4615, 4.0875]
- (1.8095, 2.4615]
- [1.226, 1.8095]
- No data
Global Inequality: Democracy
- Polity-V data highlights global disparities in democracy.
- (9, 10]
- (6, 9]
- (-2, 6]
- [-10, -2]
- No data
Economic Development, Demography, and Institutions: Global Mega Trends
- Demographic change includes population aging, fertility decline, and education expansion.
- Other trends: technological change, economic development, increasing inequality, democratic reversals, climate change, and resource depletion.
- Microeconomics focuses on individual decisions
- Macroeconomics focuses on aggregate dynamics.
Demography and Economic Development
- Demography impacts savings, education, and fertility at the micro-level.
- Macro-level: demography affects capital stock, human capital, and population dynamics.
Stylized Patterns of Long-Run Development
- Economic transition involves a shift from stagnation to sustained income growth.
- Economic transition is linked to the expansion of human capital.
- Demographic transition includes increased adult longevity, declined child mortality, and fertility decline.
Conceptual Framework
- Long-run development can be modeled using overlapping generations with finite life expectancy, and is based on Cervellati and Sunde (AER 2005, AEJ:Macro 2015).
- Individual decisions: education and fertility (quantity, quality).
- General equilibrium: production, factor prices, and incomes.
- Externalities across generations (or countries).
- Health and production technologies.
- Long-run equilibrium development dynamics
- Delays in development arise due to country-specific factors.
Demography: Longevity Dynamics
- Life expectancy at birth has been increasing over time.
Demography: Fertility Dynamics
- Total Fertility rate is decreasing over time.
Simulation and Data: Sweden 1750-2000
- The data shows life expectancy at birth and age 5.
- School enrolment and the share of skilled workers is increasing over time.
The Timing of the Take-Off
- Lower extrinsic life expectancy implies a later onset of the take-off.
- Lower level of economic development.
- Extrinsic mortality varies considerably and depends on country-specific, time-invariant factors (Cervellati, Sunde and Valmori, Mathematical Population Studies 2012).
Filling the Gaps
- Comprehensive growth framework should capture endogenous accumulation and interaction between the following state variables: physical capital, population, human capital and ideas (technology)
- Investigation savings and capital effects on human and economic development, drivers of delay, and institutions.
Dynamics of Long-Run Development
- 2 Period OLG: work, education, fertility, are savings
- Work returns to savings.
- Education and fertility are costly.
- Aggregate capital-skill complementarity.
Filling the Gaps: Evidence:
- Life expectancy effect on schooling and growth
- Prototype of the Ben-Porath model: investing in human capital takes time
- Budget constraints imply greater longevity to more education
- Longevity also affects labor supply of lifetime labor
The Role of Health
- Ben-Porath with realistic assumptions: realistic survival law, consideration of variation along the intensive margin of labor supply, and realistic human capital production function and earnings function.
- Lifetime labor supply isn't a criterion, the relative increase of benefits over costs is.
Life Expectancy and Growth:
- Solow-type closed economy considered
- Formula to work out effects of Life Expectancy T
- Data taken from 47 countries between 1940 and 2000 for analysis.
Life Expectancy and Growth:
- Contradictory evidence is from the data panel
- Negative growth can occur from Malthusian features.
- Potential effects of demographic Transition.
Filling the Gaps: Drivers of Delay?
- Timing in demographic delays can impact contemporaneous economic development differences.
- Determines growth potential and growth dynamics
Filling the Gaps: Institutions?
- Debate of income-democracy nexus
- Does income cause democracy or does democracy cause growth?
Institutions – The Income-Democracy Nexus
- Long-run growth leads to inequality
- Institutional change based on inequality and redistribution
- Combines new insights
Conclusion
- Demographic dynamics are crucial to understand development and inequality dynamics
- Health and longevity affects education
- Fertility and population have an effect on wage structure
- Global development linked to heterogeneous demographics
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