Working Paper: CEPR ID: DP9399
Authors: Matteo Cervellati; Uwe Sunde
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.
Keywords: life expectancy; lifetime labor supply; longevity; rectangularization of the survival function; schooling
JEL Codes: E20; J22; J24; J26; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased life expectancy (J17) | optimal schooling (I21) |
| mortality reductions at intermediate ages (I12) | relative benefits of schooling (J24) |
| historical data from US cohorts (born 1840-1930) (N32) | relative benefits from schooling (J24) |
| changes in mortality rates (J11) | educational incentives (I22) |
| changes in survival rates (C41) | historical drop in expected total working hours (J29) |