Health, Working Time and Growth: The American Puzzle
Tanguy Le Fur  1@  , Alain Trannoy  1, *@  
1 : Aix-Marseille School of Economics  (AMSE)  -  Website
Ecole Centrale Marseille (ECM), Ecole des Hautes Etudes en Sciences Sociales (EHESS), Centre national de la recherche scientifique (CNRS)
GREQAM, Centre de la Charité, 2 rue de la Charité, 13236 Marseille Cedex 02 -  France
* : Corresponding author

Since the 1980s, the US follows a different growth path than other developed economies: the reduction in hours worked stopped, and life expectancy started to increase at a slower pace despite a surge in health expenditure as a share of GDP. There are many specific explanations for each phenomenon. For example, Case and Deaton (2015) put into the spotlight the opioid epidemic increasing mortality among non-Hispanic white Americans. We investigate the plausibility of a global link between these three phenomena. For some reasons (taxes, change in preferences, change in returns, increasing inequality), Americans are willing to work a lot, thereby deteriorating their health capital at a higher rate than Europeans. They offset their health problems by purchasing costly drugs and medical care, but because curative medicine is less efficient than a preventive life-style, the medical treatment may not be fully operative. As a result, Americans experience lower gains in life expectancy and a higher share of medical spending. We build an exogenous growth model with a dynamic equation of accumulation of health capital (Grossman 1972), which depreciation rate increases with work effort. We are able to reproduce the three stylized facts at the steady state: lower preferences for leisure as in the US lead to both a higher number of hours worked and a higher share of health expenditure and, provided that medical technology exhibits strong enough diminishing returns, a deterioration of the health capital stock which translates into a lower life expectancy. This provides a restriction to test the external validity of our global explanation. 


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