Title: Public investment, life expectancy and income growth

Authors: Minoru Watanabe; Masaya Yasuoka

Addresses: School of Economics, Hokusei Gakuen University, Hokkaido, Japan ' School of Economics, Kwansei Gakuin University, Hyogo, Japan

Abstract: Based on individual occupational choice in the model including a production function with public investment, this paper presents an examination of how public investment affects the dynamics. Individuals work as skilled labourers or unskilled labourers. As in the model described by Caselli (1999), educational costs are necessary to work as a skilled labourer. Results show that life expectancy determines whether income growth occurs or not. Public investment can bring about income growth if life expectancy is sufficiently high. However, with low life expectancy, the government cannot bring about income growth with an increase in public investment. Therefore, both public investment and life expectancy should be pulled up for income growth.

Keywords: public investment; life expectancy; occupational choice; economic growth; skilled labourer; unskilled labourer; education; production function; dynamics.

DOI: 10.1504/AJESD.2017.090004

African Journal of Economic and Sustainable Development, 2017 Vol.6 No.2/3, pp.216 - 224

Received: 08 Dec 2016
Accepted: 29 Oct 2017

Published online: 26 Feb 2018 *

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