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

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  • Cervellati, Matteo
  • Sunde, Uwe

Abstract

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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Keywords: Life Expectancy; Lifetime Labor Supply; Longevity; Rectangularization of the Survival Function; Schooling;

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Find related papers by JEL classification:
  • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
  • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
  • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
  • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
  • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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  1. Sheshinski, Eytan, 2009. "Uncertain Longevity and Investment in Education," MPRA Paper 53144, University Library of Munich, Germany.
  2. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2000. "Vintage Human Capital, Demographic Trends and Endogenous Growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2000007, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. 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.
  4. dʼAlbis, Hippolyte & Lau, Sau-Him Paul & Sánchez-Romero, Miguel, 2012. "Mortality transition and differential incentives for early retirement," Journal of Economic Theory, Elsevier, vol. 147(1), pages 261-283.
  5. Strulik, Holger & Werner, Katharina, 2012. "Life Expectancy, Labor Supply, and Long-Run Growth: Reconciling Theory and Evidence," Hannover Economic Papers (HEP) dp-497, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
  6. 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.
  7. repec:dau:papers:123456789/6825 is not listed on IDEAS
  8. Alexander Ludwig & Thomas Schelkle & Edgar Vogel, 2012. "Demographic Change, Human Capital and Welfare," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 94-107, January.
  9. Blinder, Alan S & Weiss, Yoram, 1976. "Human Capital and Labor Supply: A Synthesis," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 449-72, June.
  10. John Wilmoth & Shiro Horiuchi, 1999. "Rectangularization revisited: Variability of age at death within human populations," Demography, Springer;Population Association of America (PAA), vol. 36(4), pages 475-495, November.
  11. Casper Hansen & Lars Lønstrup, 2012. "Can higher life expectancy induce more schooling and earlier retirement?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1249-1264, October.
  12. Seema Jayachandran & Adriana Lleras-Muney, 2009. "Life Expectancy and Human Capital Investments: Evidence from Maternal Mortality Declines," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 349-397.
  13. 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.
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  15. repec:gdm:wpaper:7311 is not listed on IDEAS
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Cited by:

  1. Strulik, Holger & Werner, Katharina, 2014. "Elite education, mass education, and the transition to modern growth," Center for European, Governance and Economic Development Research Discussion Papers 205, University of Goettingen, Department of Economics.
  2. Titus J. Galama & Hans van Kippersluis, 2015. "A Theory of Education and Health," Tinbergen Institute Discussion Papers 15-031/V, Tinbergen Institute.
  3. Hansen, Casper Worm & Strulik, Holger, 2015. "Life expectancy and education: Evidence from the cardiovascular revolution," Center for European, Governance and Economic Development Research Discussion Papers 261, University of Goettingen, Department of Economics.
  4. Kuhn, Michael & Prettner, Klaus, 2012. "Growth and welfare effects of health care in knowledge based economies," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 03/2012, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
  5. Strulik, Holger & Werner, Katharina, 2013. "50 is the new 30: Long-run trends of schooling and retirement explained by human aging," Center for European, Governance and Economic Development Research Discussion Papers 152, University of Goettingen, Department of Economics.
  6. Sanchez-Romero, Miguel & d'Albis, Hippolyte & Fürnkranz-Prskawetz, Alexia, 2016. "Education, lifetime labor supply, and longevity improvements," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 06/2016, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
  7. Théophile T. Azomahou & Raouf Boucekkine & Bity Diene, 2016. "HIV/AIDS and Development: A Reappraisal of the Productivity and Factor Accumulation Effects," American Economic Review, American Economic Association, vol. 106(5), pages 472-77, May.
  8. Noël Bonneuil & Raouf Boucekkine, 2015. "Longevity, Age-Structure, and Optimal Schooling," Working Papers halshs-01082317, HAL.
  9. Baranov, Victoria & Bennett, Daniel & Kohler, Hans-Peter, 2015. "The indirect impact of antiretroviral therapy: Mortality risk, mental health, and HIV-negative labor supply," Journal of Health Economics, Elsevier, vol. 44(C), pages 195-211.
  10. Matteo Cervellati & Uwe Sunde, 2015. "The effect of life expectancy on education and population dynamics," Empirical Economics, Springer, vol. 48(4), pages 1445-1478, June.
  11. Freddy Heylen & Pieter Van Rymenant & Brecht Boone & Tim Buyse, 2016. "On The Possibility And Driving Forces Of Secular Stagnation - A General Equilibrium Analysis Applied To Belgium -," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 16/919, Ghent University, Faculty of Economics and Business Administration.
  12. Geppert, Christian, 2015. "On the Distributional Implications of Demographic Change," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113070, Verein für Socialpolitik / German Economic Association.
  13. Nuarpear Lekfuangfu, 2016. "Mortality Risk and Human Capital Investment: The Legacy of Landmines in Cambodia," PIER Discussion Papers 35., Puey Ungphakorn Institute for Economic Research, revised Jul 2016.
  14. Ben J. Heijdra & Laurie S. M. Reijnders, 2015. "Longevity Shocks with Age-Dependent Productivity Growth," CESifo Working Paper Series 5364, CESifo Group Munich.
  15. Pan Liu, 2015. "Life expectancy, schooling and lifetime labor supply: the Ben-Porath mechanism revisited," Economics Bulletin, AccessEcon, vol. 35(1), pages 133-139.

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