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Education, lifetime labor supply, and longevity improvements

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  • Sanchez-Romero, Miguel
  • d'Albis, Hippolyte
  • Fürnkranz-Prskawetz, Alexia

Abstract

This paper presents an analysis of the differential role of mortality for the optimal schooling and retirement age when the accumulation of human capital follows the so-called "Ben-Porath mechanism". We set up a life-cycle model of consumption and labor supply at the extensive margin that allows for endogenous human capital formation. This paper makes two important contributions. First, we provide the conditions under which a decrease in mortality leads to a longer education period and an earlier retirement age. Second, those conditions are decomposed into a Ben-Porath mechanism and a lifetime-human wealth effect vs. the years-to-consume effect. Finally, using US and Swedish data for cohorts born between 1890 and 2000, we show that our model can match the empirical evidence.

Suggested Citation

  • 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).
  • Handle: RePEc:zbw:tuweco:062016
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    Cited by:

    1. Даниелян, Владимир, 2016. "Детерминанты Пенсионного Возраста: Обзор Исследований
      [Determinants of Retirement Age: A Review of Research]
      ," MPRA Paper 73865, University Library of Munich, Germany.
    2. repec:eee:matsoc:v:93:y:2018:i:c:p:22-36 is not listed on IDEAS
    3. repec:eee:mateco:v:72:y:2017:i:c:p:134-144 is not listed on IDEAS
    4. Sanchez-Romero, Miguel & Fürnkranz-Prskawetz, Alexia, 2017. "Redistributive effects of the US pension system among individuals with different life expectancy," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 03/2017, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).

    More about this item

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • 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

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