Life expectancy, labor supply, and long-run growth: Reconciling theory and evidence

Arbeitspapier

We set up a simple overlapping generation model that allows us to distinguish between life expectancy and active life expectancy. We show that individuals optimally adjust to a longer active life by educating more and, if the labor supply elasticity is high enough, by supplying less labor. When calibrated to US data the model explains the historical evolution of increasing education and declining labor supply (of cohorts born 1850-1950) as an optimal response to increasing active life expectancy. We integrate the theory into a unified growth model and reestablish increasing life expectancy as an engine of long-run economic development.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cege Discussion Papers ; No. 141

Classification and Topics

• Classification: Wirtschaft ; Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data) ; Education and Economic Development ; Time Allocation and Labor Supply ; Economic Development: General ; Economic Growth and Aggregate Productivity: General
• Subject: longevity ; active life expectancy ; education ; hours worked ; economic growth. ; Sterblichkeit ; Arbeitsangebot ; Bevölkerungsökonomie ; Bildung ; Arbeitszeit ; Wirtschaftswachstum ; Overlapping Generations ; Theorie ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Strulik, Holger ; Werner, Katharina
• Event: Veröffentlichung
• (who): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (where): Göttingen
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/70224