Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/207504 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12680
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper analyses the effects of disease and war on the accumulation of human and physical capital. We employ an overlapping-generations frame-work in which young adults, confronted with such hazards and motivated by old-age provision and altruism, make decisions about investments in schooling and reproducible capital. A poverty trap exists for a wide range of stationary war losses and premature adult mortality. If parents are altruistic and their sub-utility function for own consumption is more concave than that for the children's human capital, the only possible steady-state growth path involves full education. Otherwise, steady-state paths with incompletely educated children may exist, some of them stationary ones. We also examine, analytically and with numerical examples, a growing economy's robustness in a stochastic environment. The initial boundary conditions have a strong influence on outcomes in response to a limited sequence of destructive shocks.
Subjects: 
premature mortality
capital accumulation and destruction
steady states
poverty traps
overlapping generations
JEL: 
D91
E13
I15
I25
O11
O41
Document Type: 
Working Paper

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