Life Expectancy and Income: The Ben-Porath Mechanism Revisited
Posted: 23 Jan 2011 Last revised: 25 Jan 2012
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: Suggested Citation