Program > Papers by author > Le Fur Tanguy

Health & Working Time: A Macroeconomic Perspective on 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

Today, Americans work substantially more than Europeans and are in much poorer health despite greater medical expenditure. We provide another rationale for the American mortality disadvantage around age 60 by relying on the negative effect on health of long hours of work. To do so, we introduce health capital in an exogenous growth model with elastic labor supply impacting its depreciation rate. We remain agnostic as to why Americans work more than Europeans, but model the difference with preferences for leisure for convenience. Longer hours of work make individuals devote a larger fraction of their resources to health care which may not be sufficient to offset the extra depreciation of their health capital stock, provided the returns to medical investments are not high enough. We then calibrate the model for the US to assess how much of the difference in both mortality rates and health care expenditure come from excess labor supply. We build a counterfactual using the hours of work in UK in 2015. In the baseline counterfactual, the US will spend as much as less 2.6% of GDP in medical expenditures and will experience 138 deaths per 100,000 people less, that is respectively one half and one quarter of the actual deviations with the UK.


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