| By: |
Bell, Clive (Heidelberg University);
Gersbach, Hans (ETH Zurich);
Komarov, Evgenij (ETH Zurich) |
| Abstract: |
This paper analyses the effects of disease and war on the accumulation of
human and physical capital. We employ an overlapping-generations frame-work in
which young adults, confronted with such hazards and motivated by old-age
provision and altruism, make decisions about investments in schooling and
reproducible capital. A poverty trap exists for a wide range of stationary war
losses and premature adult mortality. If parents are altruistic and their
sub-utility function for own consumption is more concave than that for the
children's human capital, the only possible steady-state growth path involves
full education. Otherwise, steady-state paths with incompletely educated
children may exist, some of them stationary ones. We also examine,
analytically and with numerical examples, a growing economy's robustness in a
stochastic environment. The initial boundary conditions have a strong
influence on outcomes in response to a limited sequence of destructive shocks. |
| Keywords: |
premature mortality, capital accumulation and destruction, steady states, poverty traps, overlapping generations |
| JEL: |
D91 E13 I15 I25 O11 O41 |
| Date: |
2019–10 |
| URL: |
http://d.repec.org/n?u=RePEc:iza:izadps:dp12680&r=all |