Quotation Baldanzi, Annarita, Prettner, Klaus, Tscheuschner, Paul. 2019. Longevity-induced vertical innovation and the tradeoff between life and growth. Journal of Population Economics. 32 1293-1313.


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Abstract

We analyze the economic growth effects of rising longevity in a framework of endogenous growth driven by quality-improving innovations. A rise in longevity increases savings and thereby places downward pressure on the market interest rate. Since the monopoly profits generated by a successful innovation are discounted by the endogenous market interest rate, this raises the net present value of innovations, which, in turn, fosters R&D investments. The associated increase in the employment of scientists leads to faster technological progress and a higher long-run economic growth rate. From a welfare perspective, the direct effect of an increase in life expectancy tends to be larger than the indirect effect of the induced higher consumption due to faster economic growth. Consequently, the debate on rising health care expenditures should not be predominantly based on the growth effects of health care.

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Publication's profile

Status of publication Published
Affiliation External
Type of publication Journal article
Journal Journal of Population Economics
Citation Index SSCI
WU-Journal-Rating new FIN-A, VW-C, WH-B
Language English
Title Longevity-induced vertical innovation and the tradeoff between life and growth
Volume 32
Year 2019
Page from 1293
Page to 1313
Reviewed? Y
URL https://link.springer.com/article/10.1007%2Fs00148-018-0724-x
DOI https://doi.org/10.1007/s00148-018-0724-x
Open Access N

Associations

People
Prettner, Klaus (Details)
External
Baldanzi, Annarita (University of Milan, Italy)
Tscheuschner, Paul (University of Hohenheim, Germany)
Organization
Department of Economics (Crespo Cuaresma) (Details)
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