Mortality Decline, Human Capital Investment and Economic Growth
University of MARYLAND, Department of Economics; National Bureau of Economic Research (NBER); Koc University, Graduate School of Business
Harl Edgar Ryder
Brown University - Department of Economics
David N. Weil
Brown University - Department of Economics; National Bureau of Economic Research (NBER)
Journal of Development Economics, Forthcoming
We examine the role of increased life expectancy in raising human capital investment during the process of economic growth. We develop a continuous time, overlapping generations model in which individuals make optimal schooling investment choices in the face of a constant probability of death. We present analytic results, followed by results from a calibrated version of the model using realistic estimates of the return to schooling. Mortality decline produces economically significant increases in schooling and consumption. Allowing schooling to vary endogenously produces a much larger response of consumption and capital to mortality decline than is observed when schooling is held fixed.
Accepted Paper Series
Date posted: February 22, 2003
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