Human Capital and the Demographic Transition: Why Schooling Became Optimal

47 Pages Posted: 4 Mar 2012  

Edgar Vogel

Deutsche Bundesbank; Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

Date Written: February 14, 2011

Abstract

This paper develops a model with increasing adult life expectancy as the driving force of the economic and demographic transition. We show that if parents invest their own time into children's human capital, rising adult life expectancy unambiguously increases fertility.

With children educated in schools and parents paying tuition fees, the reaction of fertility to changes in longevity is ambiguous. If productivity of adult human capital is sufficiently low, fertility will decrease. Without schooling system, rising life expectancy rises, a schooling system will be endogenously adopted and the relationship between fertility and longevity reversed.

We argue therefore that it is important to account for the change in the nature of the costs of child education: from time costs to monetary costs.

Keywords: Life Expectancy, Fertility, Human Capital, Growth

JEL Classification: J11, I12, N30, I20, J24

Suggested Citation

Vogel, Edgar, Human Capital and the Demographic Transition: Why Schooling Became Optimal (February 14, 2011). MEA Discussion Paper No. 247-11. Available at SSRN: https://ssrn.com/abstract=2014066 or http://dx.doi.org/10.2139/ssrn.2014066

Edgar Vogel (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Strasse 14
Frankfurt am Main, 60431
Germany

HOME PAGE: http://www.bundesbank.de

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

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