Essays on endogenous lifetime, economic growth and income inequality

This dissertation consists of three essays that investigate the effects of uncertain lifetime on various macroeconomic variables.; In the first essay we incorporate endogenous lifetime in the form of endogenous time preference in a simple Diamond-type economy and analyze the resulting dynamics both for the competitive and command equilibrium. Unlike most of the growth literature, we assume an individual's rate of time preference is decreasing in consumption (decreasing marginal impatience) and show that this intuitively more appealing assumption is consistent with a stable, non-trivial competitive equilibrium. Our analysis of the competitive equilibrium indicates that one explanation for the observed 'divergence' of per capita income among countries could lie in the difference in their ability to increase patience. In a command economy, we find that the local dynamics around the equilibrium could be characterized by damped endogenous oscillations, suggesting the possibility of endogenous business cycle phenomenon.; The objective of the second essay is to examine growth and welfare effects of lifetime-uncertainty in an overlapping generations economy with human capital-led endogenous growth. We analyze the relevance of government expenditure on health and education to counter such growth-reducing forces. To that end, we focus on three different models that differ with respect to the mode of financing of education: (i) both private and public spending, (ii) only public spending, and (iii) only private spending. Results show that models (i) and (iii) outperform model (ii) with respect to long-term growth rates of per capita income, welfare levels and other important macroeconomic indicators. Theoretical predictions of model rankings for these macroeconomic indicators are also supported by observed stylized facts.; The third essay investigates the importance of differential mortality across income groups as a channel through which income inequality persists. We incorporate endogenous child mortality and fertility in an overlapping generations model and demonstrate that differential child mortality and its interaction with differential fertility could generate an "inequality trap", where high risk of child death prevents poor households from adequately investing in education. Empirical evidence based on cross-country micro-data support differential child mortality as an important channel for the transmission of inequality, as predicted by the model.