DP9399 Life Expectancy, Schooling, and Lifetime Labor Supply: Theory and Evidence Revisited
|Author(s):||Matteo Cervellati, Uwe Sunde|
|Publication Date:||March 2013|
|Keyword(s):||Life Expectancy, Lifetime Labor Supply, Longevity, Rectangularization of the Survival Function, Schooling|
|JEL(s):||E20, J22, J24, J26, O11|
|Programme Areas:||Labour Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9399|
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.