Effects of Longevity on Changes in Returns to Education, Human Capital, and Economic Growth

This paper focuses on the effects of longevity on the changes in returns to education, as well as human capital and economic growth. Health issues and the quality of life may reduce human capital which can be defined loosely and thus decrease income over the lifetime. The income effects of health are likely to vary depending on how health changes (for example morbidity vs. mortality) and at what time of life (for instance, infancy, working age or older). In this paper, we show that higher rates of longevity improvements would also boost economic growth, even if we eliminate the human capital formation mechanism and only look at the growth effects from higher rates of longevity improvements due to investments in physical capital. We show that some researchers find large labor market returns on height in adulthood, which is to a certain extent a proxy for early-life health. In addition, we deduct the trend that while lower mortality moves populations to a new path of growth, where that path ultimately lands depend on how fertility adjusts to changes in health. By these extrapolations, improved health would inevitably lead to larger gains for unhealthy regions, even though the gaps between rich and poor countries are orders of magnitude larger than gains estimated in the micro-literature. Furthermore, we discuss in detail the aggregate implications of the micro-estimates and point out the complications when extrapolating to the aggregate equilibrium, particularly due to the effects of health status on the population size.