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Education, lifetime labor supply, and longevity improvements

Miguel Sanchez-Romero (), Hippolyte d'Albis () and Alexia Fürnkranz-Prskawetz

No 06/2016, ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy from Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON)

Abstract: This paper presents an analysis of the differential role of mortality for the optimal schooling and retirement age when the accumulation of human capital follows the so-called "Ben-Porath mechanism". We set up a life-cycle model of consumption and labor supply at the extensive margin that allows for endogenous human capital formation. This paper makes two important contributions. First, we provide the conditions under which a decrease in mortality leads to a longer education period and an earlier retirement age. Second, those conditions are decomposed into a Ben-Porath mechanism and a lifetime-human wealth effect vs. the years-to-consume effect. Finally, using US and Swedish data for cohorts born between 1890 and 2000, we show that our model can match the empirical evidence.

JEL-codes: I25 J10 J24 J26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dge and nep-hea
Date: 2016
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Related works:
Journal Article: Education, lifetime labor supply, and longevity improvements (2016) Downloads
Working Paper: Education, lifetime labor supply, and longevity improvements (2016)
Working Paper: Education, lifetime labor supply, and longevity improvements (2015) Downloads
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