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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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  9. Eytan Sheshinski, 2009. "Uncertain Longevity and Investment in Education," CESifo Working Paper Series 2784, CESifo Group Munich.
  10. 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.
  11. 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.
  12. 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.
  13. 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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  16. Holger Strulik & Sebastian Vollmer, 2013. "Long-run trends of human aging and longevity," Journal of Population Economics, European Society for Population Economics, vol. 26(4), pages 1303-1323, October.
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