Growth and Enduring Epidemic Diseases

CESifo Working Paper Series No. 1729

ETH Zurich Economics Working Paper No. 06/57

40 Pages Posted: 13 Jun 2006

See all articles by Clive Bell

Clive Bell

University of Heidelberg - South Asia Institute (SAI)

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Date Written: October 2006

Abstract

This paper studies the formation of human capital and its transmission across generations when premature adult mortality is a salient feature of the demographic landscape, either permanently or in the form of a long-period wave that follows the outbreak of an epidemic. We establish several threshold properties of the model, for such a shock can severely retard economic growth, even to the point of leading to an economic collapse. Premature adult mortality may exacerbate inequality under nuclear family arrangements. Pooling mortality risks with equal treatment of all children may fend off, or even induce, a collapse, depending on the initial conditions and the size and duration of the shock. Awareness campaigns may also trigger a collapse by introducing undesirable expectational feedbacks.

Keywords: epidemic diseases, HIV/AIDS, growth, collapse, pooling

JEL Classification: I10, I20, O11, O40

Suggested Citation

Bell, Clive and Gersbach, Hans, Growth and Enduring Epidemic Diseases (October 2006). CESifo Working Paper Series No. 1729; ETH Zurich Economics Working Paper No. 06/57. Available at SSRN: https://ssrn.com/abstract=908503

Clive Bell

University of Heidelberg - South Asia Institute (SAI) ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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