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Growth and welfare effects of health care in knowledge-based economies
Michael Kuhn1, Klaus Prettner2
1Wittgenstein Centre (IIASA, VID/ÖAW, WU), Vienna Institute of Demography, Welthandelsplatz 2, Level 2, A-1020 Vienna, Austria.
Abstract:
We study the effects of labor intensive health care within a research and development (R&D) driven growth model with overlapping generations. Health care increases longevity, labor participation, and productivity, while it also diverts labor away from production and R&D. We examine under which conditions expanding health care enhances growth and welfare and establish mild conditions under which the provision of health care beyond the growth-maximizing level is Pareto superior.
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