A Politico-Economic Model of Aging, Technology Adoption and Growth

26 Pages Posted: 8 May 2007

See all articles by Giovanni Prarolo

Giovanni Prarolo

University of Bologna; University of Milan - Centro Studi Luca d'Agliano (LdA)

Francesco Lancia

University of Bologna - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 2007

Abstract

Over the past century, all OECD countries have been characterized by a dramatic increase in economic conditions, life expectancy and educational attainment. This paper provides a positive theory that explains how an economy might evolve when the longevity of its citizens both influences and is influenced by the process of economic development. We propose a three periods OLG model where agents, during their lifetime, cover different economic roles characterized by different incentive schemes and time horizon. Agents' decisions embrace two dimensions: the private choice about education and the public one upon innovation policy. The theory focuses on the crucial role played by heterogeneous interests in determining innovation policies, which are one of the keys to the growth process: the economy can be discontinuously innovation-oriented due to the different incentives of individuals and different schemes of political aggregation of preferences. The model produces multiple development regimes associated with different predictions about life expectancy evolution, educational investment dynamics, and technology adoption policies. Transitions between these regimes depend on initial conditions and parameter values.

Keywords: Growth, Life Expectancy, Human Capital, Systemic Innovation, Majority Voting

JEL Classification: D70, J10, O14, O31, O43

Suggested Citation

Prarolo, Giovanni and Lancia, Francesco, A Politico-Economic Model of Aging, Technology Adoption and Growth (April 2007). FEEM Working Paper No. 48.2007, Available at SSRN: https://ssrn.com/abstract=984242 or http://dx.doi.org/10.2139/ssrn.984242

Giovanni Prarolo (Contact Author)

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

HOME PAGE: http://www2.dse.unibo.it/prarolo/

University of Milan - Centro Studi Luca d'Agliano (LdA) ( email )

Via P. Amedeo 34
Milano, Mi 20122
Italy

Francesco Lancia

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
40125 Bologna, fc 47100
Italy

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