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

  • Cervellati, Matteo

    ()

    (University of Bologna)

  • Sunde, Uwe

    ()

    (University of Munich)

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 men 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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7286.

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Length: 34 pages
Date of creation: Mar 2013
Date of revision:
Publication status: published in: Econometrica, 2013, 81 (5), 2055–2086
Handle: RePEc:iza:izadps:dp7286
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  1. Holger Strulik & Sebastian Vollmer, 2011. "Long-Run Trends of Human Aging and Longevity," PGDA Working Papers 7311, Program on the Global Demography of Aging.
  2. 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.
  3. Raouf Boucekkine & David de la Croix & Omar Licandro, . "vintage human capital, demographic trends and endogenous growth," Working Papers 2000-02, FEDEA.
  4. 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.
  5. Strulik, Holger & Werner, Katharina, 2012. "Life expectancy, labor supply, and long-run growth: Reconciling theory and evidence," Center for European, Governance and Economic Development Research Discussion Papers 141, University of Goettingen, Department of Economics.
  6. John Wilmoth & Shiro Horiuchi, 1999. "Rectangularization revisited: Variability of age at death within human populations," Demography, Springer, vol. 36(4), pages 475-495, November.
  7. 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.
  8. Eytan Sheshinski, 2009. "Uncertain Longevity and Investment in Education," CESifo Working Paper Series 2784, CESifo Group Munich.
  9. Raj Chetty & Adam Guren & Dayanand S. Manoli & Andrea Weber, 2011. "Does Indivisible Labor Explain the Difference Between Micro and Macro Elasticities? A Meta-Analysis of Extensive Margin Elasticities," NBER Working Papers 16729, National Bureau of Economic Research, Inc.
  10. 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.
  11. 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.
  12. 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.
  13. 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.
  14. Alan Blinder & Yoram Weiss, 1974. "Human Capital and Labor Supply: A Synthesis," Working Papers 435, Princeton University, Department of Economics, Industrial Relations Section..
  15. repec:hal:cesptp:hal-00659868 is not listed on IDEAS
  16. Alexander Ludwig & Thomas Schelkle & Edgar Vogel, 2011. "Online Appendix to "Demographic Change, Human Capital and Welfare"," Technical Appendices 08-168, Review of Economic Dynamics.
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