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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.

Suggested Citation

  • Cervellati, Matteo & Sunde, Uwe, 2013. "Life Expectancy, Schooling, and Lifetime Labor Supply: Theory and Evidence Revisited," CEPR Discussion Papers 9399, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9399
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    References listed on IDEAS

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    1. de la Croix, David & Licandro, Omar, 1999. "Life expectancy and endogenous growth," Economics Letters, Elsevier, vol. 65(2), pages 255-263, November.
    2. Sheshinski, Eytan, 2009. "Uncertain Longevity and Investment in Education," MPRA Paper 53144, University Library of Munich, Germany.
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    More about this item

    Keywords

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

    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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