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Life Expectancy, Schooling, and Lifetime Labor Supply: Theory and Evidence Revisited

  • Cervellati, Matteo
  • Sunde, Uwe

This paper presents a theoretical and empirical analysis of the role of life expectancy for optimal schooling and lifetime labor supply. The results of a simple prototype Ben-Porath model with age-specific survival rates show that an increase in lifetime labor supply is not a necessary, nor a sufficient, condition for greater life expectancy to increase optimal schooling. The observed increase in survival rates during working ages that follows from the ``rectangularization'' of the survival function is crucial for schooling and labor supply. The empirical results suggest that the relative benefits of schooling have been increasing across cohorts of US man born 1840-1930. A simple quantitative analysis shows that a realistic shift in the survival function can lead to an increase in schooling and a reduction in lifetime labor hours.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9399.

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Date of creation: Mar 2013
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Handle: RePEc:cpr:ceprdp:9399
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  1. Seema Jayachandran & Adriana Lleras-Muney, 2008. "Life Expectancy and Human Capital Investments: Evidence From Maternal Mortality Declines," NBER Working Papers 13947, National Bureau of Economic Research, Inc.
  2. Sheshinski, Eytan, 2009. "Uncertain Longevity and Investment in Education," MPRA Paper 53144, University Library of Munich, Germany.
  3. Alexander Ludwig & Thomas Schelkle & Edgar Vogel, 2011. "Online Appendix to "Demographic Change, Human Capital and Welfare"," Technical Appendices 08-168, Review of Economic Dynamics.
  4. repec:fda:fdaddt:2000-02 is not listed on IDEAS
  5. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2002. "Vintage Human Capital, Demographic Trends, and Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 104(2), pages 340-375, June.
  6. Raj Chetty & Adam Guren & Day Manoli & Andrea Weber, 2012. "Does Indivisible Labor Explain the Difference between Micro and Macro Elasticities? A Meta-Analysis of Extensive Margin Elasticities," NBER Chapters, in: NBER Macroeconomics Annual 2012, Volume 27, pages 1-56 National Bureau of Economic Research, Inc.
  7. Ludwig, Alexander & Schelkle, Thomas & Vogel, Edgar, 2010. "Demographic Change, Human Capital and Welfare," MEA discussion paper series 10196, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  8. Rogerson, Richard & Wallenius, Johanna, 2009. "Micro and macro elasticities in a life cycle model with taxes," Journal of Economic Theory, Elsevier, vol. 144(6), pages 2277-2292, November.
  9. Holger Strulik & Sebastian Vollmer, 2013. "Long-run trends of human aging and longevity," Journal of Population Economics, Springer, vol. 26(4), pages 1303-1323, October.
  10. Rosenbloom, Joshua L., 1996. "Was There a National Labor Market at the End of the Nineteenth Century? New Evidence on Earnings in Manufacturing," The Journal of Economic History, Cambridge University Press, vol. 56(03), pages 626-656, September.
  11. Alan Blinder & Yoram Weiss, 1974. "Human Capital and Labor Supply: A Synthesis," Working Papers 435, Princeton University, Department of Economics, Industrial Relations Section..
  12. repec:hal:cesptp:hal-00659868 is not listed on IDEAS
  13. d'Albis, Hippolyte & Lau, Paul & Sanchez-Romero, Miguel, 2010. "Mortality transition and differential incentives for early retirement," LERNA Working Papers 10.21.327, LERNA, University of Toulouse.
  14. Casper Hansen & Lars Lønstrup, 2012. "Can higher life expectancy induce more schooling and earlier retirement?," Journal of Population Economics, Springer, vol. 25(4), pages 1249-1264, October.
  15. repec:got:cegedp:141 is not listed on IDEAS
  16. John Wilmoth & Shiro Horiuchi, 1999. "Rectangularization revisited: Variability of age at death within human populations," Demography, Springer, vol. 36(4), pages 475-495, November.
  17. Peter Rangazas, 2002. "The Quantity and Quality of Schooling and U.S. Labor Productivity Growth (1870-2000)," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 932-964, October.
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