Life Expectancy and Income Convergence in the World: A Dynamic General Equilibrium Analysis
IMF Working Papers, June 1, 2008
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- Life Expectancy and Income Convergence in the World: A Dynamic General Equilibrium Analysis
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Bibliographic details
- Authors: Kenichi Ueda
- Published: June 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451870169.001
Main findings
- 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.
- The 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 from increased life expectancy, 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.
Conceptual contribution
- Introduces "dynastic general equilibrium value of life" as a welfare metric capturing the value of increased life expectancy within a general equilibrium framework.
Calibration results and interpretation
- Calibration yields sizable welfare gains from increased life expectancy.
- Despite sizable welfare gains, large cross-country inequality persists and is little mitigated by life-expectancy–related welfare improvements.
- Conclusion: GDP-based measures continue to approximate (non) convergence in world living standards even after adjusting for life expectancy changes.
Subject areas and keywords
- Subject: Consumption, Health, Human capital, Income, Insurance
- Keywords: depreciation rate, law of motion, life expectancy, physical capital, WP