Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73111
Authors: 
Strulik, Holger
Werner, Katharina
Year of Publication: 
2012
Series/Report no.: 
Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät, Universität Hannover 497
Abstract: 
We set up a three-period overlapping generation model in which young individuals allocate their time to schooling and work, healthy middle aged individuals allocate their time to leisure and work and their income to consumption and savings for retirement, and old age individuals live off their savings. The three period setup allows us to distinguish between longevity and active life expectancy (i.e. the expected length of period 1 and 2). We show that individuals optimally respond to a longer active life by educating more and, if the labor supply elasticity is high enough, by supplying less labor. We calibrate the model to US data and show that the historical evolution of increasing education and declining labor supply can be explained 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.
Subjects: 
longevity
active life expectancy
education
hours worked
economic growth
JEL: 
E20
I25
J22
O10
O40
Document Type: 
Working Paper

Files in This Item:
File
Size
423.3 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.