Longevity and Schooling: The Case of Retirement

Nina Boberg-Fazlic

No 12-15, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: It is often conjectured that higher life expectancy leads to longer schooling. The reasoning behind this notion is that a longer lifespan increases the recovery period of human capital investment and thus, makes it more profitable to invest in education. This notion goes back to Ben-Porath (1967) and is therefore often termed the Ben-Porath mechanism. However, the original Ben-Porath mechanism concerns the length of economic life and not the length of life per se. This distinction is important in the presence of retirement and especially so as earlier retirement ages are observed in many western countries. This paper presents an overlapping generations model including both an educational and a retirement decision, thereby being able to test the Ben-Porath mechanism using the correct de nition of length of working life. It is found that an increase in life expectancy does not necessarily increase the expected length of economic life as also early retirement can occur. Schooling still increases, however not due to the increase in the recovery horizon but due to an increase in the probability of surviving the recovery period.

Keywords: longevity; human capital; retirement; overlapping generations (search for similar items in EconPapers)
JEL-codes: D91 I20 J10 J26 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2012-09-01
New Economics Papers: this item is included in nep-age, nep-dem, nep-dge, nep-edu, nep-hea and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:1215

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