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Life Expectancy, Schooling, and Lifetime Labor Supply: Theory and Evidence Revisited
Author(s) -
Cervellati Matteo,
Sunde Uwe
Publication year - 2013
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta11169
Subject(s) - life expectancy , economics , expectancy theory , survival function , empirical evidence , demographic economics , labour economics , survival analysis , population , demography , statistics , sociology , mathematics , management , philosophy , epistemology
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, or 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 U.S. men born between 1840 and 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.