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Overlapping

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  • Wang, Yong
  • Stark, Oded

Abstract

We propose a new microeconomic explanation for the divergent experiences of economies in forming human capital. We suggest that the positive effect of a longer life expectancy on human capital formation arises from two separate effects: a life expectancy effect and a prolonged intergenerational overlap effect. We argue that the duration of the overlap between generations and the associated parental support can affect the marginal cost of human capital formation and hence its level: parental support is cheaper than market financing. We thus attribute the strong correlation between the formation of human capital and life expectancy not merely to a higher marginal benefit arising from a longer payback period but also to a lower marginal cost arising from a prolonged intergenerational overlap. We provide conditions under which a longer overlap results in a higher level of per capita output.

Suggested Citation

  • Wang, Yong & Stark, Oded, 2002. "Overlapping," Discussion Papers 18765, University of Bonn, Center for Development Research (ZEF).
    • Handle: RePEc:ags:ubzefd:18765
    DOI: 10.22004/ag.econ.18765
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    File URL: https://ageconsearch.umn.edu/record/18765/files/dpdp0050.pdf
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    References listed on IDEAS

    as
    1. Wang, Yong & Michael C M Leung, 2003. "Endogenous Health Care, Life Expectancy, and Economic Development," Royal Economic Society Annual Conference 2003 218, Royal Economic Society.
    2. Stark,Oded, 1999. "Altruism and Beyond," Cambridge Books, Cambridge University Press, number 9780521663731.
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    Cited by:

    1. Foreman-Peck, James, 2011. "The Western European marriage pattern and economic development," Explorations in Economic History, Elsevier, vol. 48(2), pages 292-309, April.
    2. Carolina Arteaga Cabrales, 2011. "Human Capital Externalities and Growth," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 29(66), pages 12-47, December.

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    More about this item

    Keywords

    Labor and Human Capital;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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