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M Kuhn, K. Prettner:
"Growth and welfare effects of health care in knowledge based economies";
Report for TU Wien, Working Papers in Economic Theory and Policy; Report No. Working Paper No. 03, 2012; 49 pages.

We study the e ects of a labor-intensive health care sector within an R&D-driven
growth model with overlapping generations. Health care increases longevity and la-
bor participation/productivity. We examine under which conditions expanding health
care enhances growth and welfare. Even if the provision of health care diverts labor
from productive activities, it may still fuel R&D and economic growth if the additional
wealth that comes with expanding longevity translates into a more capital/machine-
intensive nal goods production and, thereby, raises the return to developing new
machines. We establish mild conditions under which an expansion of health care be-
yond the growth-maximizing level is Pareto-improving.

endogenous growth, mortality, (Blanchard) overlapping generations, health