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Education, life expectancy and family bargaining: the Ben-Porath effect revisited

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  • Laura Leker
  • Gregory Ponthiere

Abstract

Following Ben-Porath [1967. "The Production of Human Capital and the Life-Cycle of Earnings." Journal of Political Economy 75 (3): 352-365], the influence of life expectancy on education and on human capital has attracted much attention among growth theorists. Whereas existing growth models rely on an education decision made either by the child or by his parent, we revisit the Ben-Porath effect by modelling education as the outcome of bargaining between the parent and the child. We develop a three-period overlapping generations (OLG) model, where human capital increases life expectancy and shows that as a result of the unequal remaining lifetimes faced by parents and children, the form of the Ben-Porath effect depends on how bargaining power is distributed within the family, which in turn affects long-run economic dynamics. Using data on 16 OECD countries (1940-1980), we show that introducing family bargaining helps to rationalize the observed education patterns across countries.

Suggested Citation

  • Laura Leker & Gregory Ponthiere, 2015. "Education, life expectancy and family bargaining: the Ben-Porath effect revisited," Education Economics, Taylor & Francis Journals, vol. 23(4), pages 481-513, August.
  • Handle: RePEc:taf:edecon:v:23:y:2015:i:4:p:481-513
    DOI: 10.1080/09645292.2013.869557
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    References listed on IDEAS

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    Cited by:

    1. Marie-Louise Leroux & Grégory Ponthiere, 2016. "Nursing Home Choice, Family Bargaining and Optimal Policy in a Hotelling Economy," CESifo Working Paper Series 5892, CESifo Group Munich.
    2. Yukihiro Nishimura & Pierre Pestieau & Grégory Ponthière, 2015. "Education Choices, Longevity and Optimal Policy in a Ben-Porath Economy," Working Papers halshs-01230932, HAL.
    3. Yukihiro Nishimura & Pierre Pestieau & Grégory Ponthière, 2015. "Education Choices, Longevity and Optimal Policy in a Ben-Porath Economy," PSE Working Papers halshs-01230932, HAL.

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