Discussion paper

DP9399 Life Expectancy, Schooling, and Lifetime Labor Supply: Theory and Evidence Revisited

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.

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Citation

Sunde, U and M Cervellati (2013), ‘DP9399 Life Expectancy, Schooling, and Lifetime Labor Supply: Theory and Evidence Revisited‘, CEPR Discussion Paper No. 9399. CEPR Press, Paris & London. https://cepr.org/publications/dp9399