Life Expectancy and Income Convergence in the World:A Dynamic General Equilibrium Analysis
There is world-wide convergence in life expectancy, despite little convergence in GDP per capita. If one values longer life much more than material happiness, the world living standards may this have already converged substantially. This paper introduces the concept of the dynastic general equilibrium value of life to measure welfare gains from the increase in life expectancy. A calibration study finds sizable welfare gains, but these gains hardly mitigate the large inequality among countries. A conventional GDP-based measure remains a good approximation for (non) convergence in world living standards, even when adjusted for changes in life expectancy.
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Case and Imperfect Altruism
ˆλ aggregate altruism parameter Barro-Becker assumption benchmark parameter values budget constraint business cycle calibrated coefﬁcient condition with respect consumption and investments consumption growth rate deﬁned denotes the value discount rate dynastic general equilibrium envelop theorem equilibrium life insurance equilibrium value Euler equation ﬁrst order ﬁrst-order conditions full income GDP per capita growth model growth theory higher human and physical human capital depreciation human-to-physical capital ratio imperfect Income Country Average inequality insurance beneﬁts Lagrange multipliers law of motion linear longevity measure motion of physical newly born optimal human-to-physical-capital ratio optimal ratio order conditions p-value parents partial equilibrium percent perfect altruism period physical and human physical capital Proposition regression representative agent risk aversion Speciﬁcally stochastic death survivors U.S. dollars utility value function wage premium wealth transfer welfare gains World Table 6.1 wtht