Life Expectancy and Income: The Ben-Porath Mechanism Revisited

Posted: 23 Jan 2011 Last revised: 25 Jan 2012

See all articles by Casper Worm Hansen

Casper Worm Hansen

University of Copenhagen - Department of Economics; University of Copenhagen

Lars Lønstrup

University of Southern Denmark - Department of Business and Economics

Date Written: January 21, 2011

Abstract

In this paper we show that it may be optimal for individuals to educate more and decrease future labor supply (choose earlier retirement) when life expectancy increases. This result reconciles the findings of Hazan [Hazan, M., 2009. Longevity and Lifetime Labor Supply: Evidence and Implications. Econometrica 77, 1829-1863] with theory. Further, the paper contributes to a better understanding of the conflicting empirical findings on the causal effect on income per capita from increased life expectancy.

Keywords: Life Expectancy, Education, Labour Supply, Income

JEL Classification: D91, J10, J24, O11, O40

Suggested Citation

Hansen, Casper Worm and Hansen, Casper Worm and Lønstrup, Lars, Life Expectancy and Income: The Ben-Porath Mechanism Revisited (January 21, 2011). Available at SSRN: https://ssrn.com/abstract=1744721 or http://dx.doi.org/10.2139/ssrn.1744721

Casper Worm Hansen (Contact Author)

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Copenhagen K, DK 1153
Denmark

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

Lars Lønstrup

University of Southern Denmark - Department of Business and Economics ( email )

HOME PAGE: http://www.sdu.dk/staff/loe.aspx

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