Life expectancy and economic development: Evidence from microdata

This study examines the effect of life expectancy on fertility, education, and labor force participation. Using birth and sibling histories from the Demographic Health Surveys conducted in sub‐Saharan Africa, I construct a time series of age‐specific birth rates and mortality rates at the country‐region level. I use these data to test the implications of a general equilibrium model linking life expectancy to fertility, human capital, and labor supply. My results suggest that increases in life expectancy reduce fertility, increase education, and increase labor force participation. Overall, my empirical results suggest that in sub‐Saharan Africa, increases in life expectancy will have a positive impact on growth through fertility, education, and labor supply but that the effect will be small. My results also rule out the possibility that recent shocks to adult mortality in high HIV prevalence countries will reduce fertility, increase labor productivity, and lead to faster growth.     

Labor supply of elderly people,fertility, and economic development

Increases in life expectancy and the fertility rate have been observed as per-capita income increases in economically developed countries with high per-capita income. We explain these observations using a synthetic economic model with endogenous lifetime, retirement, and human capital accumulation. In contrast to the result obtained by assuming an institutionally fixed and compulsory retirement, a longer life expectancy attributable to rises in per-capita income can induce elderly people to leave the labor market later, thereby enabling them to increase consumption of goods as well as “children” when young. Consequently, higher per-capita income can be associated with higher fertility.     

The Effect of Life Expectancy on Fertility,Saving, Schooling and Economic Growth: Theory and Evidence*

We construct a simple growth model where agents with uncertain survival choose schooling time, life‐cycle consumption and the number of children. We show that rising longevity reduces fertility but raises saving, schooling time and the growth rate at a diminishing rate. Cross‐section analyses using data from 76 countries support these propositions: life expectancy has a significant positive effect on the saving rate, secondary school enrollment and growth but a significant negative effect on fertility. Through sensitivity analyses, the effect on the saving rate is inconclusive, while the effects on the other variables are robust and consistent. These estimated effects are decreasing in life expectancy.     

Life expectancy and human capital: long-run evidence from a panel of countries

This article examines the long-run impact of life expectancy on human capital investment for a panel of 14 countries over the period 1870–2010. Using recently developed panel time series techniques, we find (i) that life expectancy at birth has a statistically significant long-run effect on schooling and (ii) that long-run causality is unidirectional from life expectancy to schooling.     

THE EVOLUTION OF EDUCATION: A MACROECONOMIC ANALYSIS

Between 1940 and 2000 there was a substantial increase in educational attainment in the United States. What caused this trend? We develop a model of human capital accumulation that features a nondegenerate distribution of educational attainment in the population. We use this framework to assess the quantitative contribution of technological progress and changes in life expectancy in explaining the evolution of educational attainment. The model implies an increase in average years of schooling of 24%, which is the increase observed in the data. We find that technological variables and in particular skill‐biased technical change represent the most important factors in accounting for the increase in educational attainment. The strong response of schooling to changes in income is informative about the potential role of educational policy and the impact of other trends affecting lifetime income.     

Human capital accumulation in R&D-based growth models

This paper develops a model that reproduces the essential aspects of the recent ICT-based economy using the framework of endogenous growth theory in which a central role is played by human capital accumulation. In particular, it considers a multi-sectoral growth model in discrete time with infinite horizon, endogenous growth, embodied technological progress, horizontal differentiation and “lab-equipment” specification of R&D, and with human capital accumulation (represented by the fact that households devote a fraction of their time to schooling), in order to take into account the crucial role of the latter when new technologies are present. In this model it is possible to obtain some important results, both analytically and through simulations, either in the case of constant productivity of schooling and in the case in which this productivity is a function of technological progress. The first conclusion is that the productivity of schooling affects the long run growth of the economy, contrary to the productivities of the other sectors, hence in this model human capital accumulation is the true engine of growth. It is then possible to study the reaction of the economy to different types of shocks, and to compare the results with the empirical evidence. The conclusion is that the model is able to reproduce such evidence, suggesting that the interaction between ICT and human capital is one of the drivers of the recent economic performance.     

Fertility and mortality changes in an overlapping-generations model with realistic demography

Many overlapping-generations models assume only working and retirement stages and are “not capable of representing the most basic feature of the human economic life cycle: that it begins and ends with periods of dependency, separated by a long intermediate period of consuming less than is produced” (Bommier and Lee, 2003). To examine the economic consequences of fertility and mortality changes in a common framework, we incorporate realistic demographic features into a continuous-time overlapping-generations model with childhood, adulthood and retirement stages. Using parameter values appropriate for industrial countries (such as the USA), we find that a fertility increase and a mortality decline, while both causing a rise in the population growth rate, have opposite effects on capital accumulation. We also consider simultaneous fertility and mortality changes, and find that the effect on capital accumulation of a mortality change dominates that of a fertility change.     

Governmental interventions and household behavior in a developing country: Anticipating the unanticipated consequences of social programs

Estimates of the joint effects of governmental health, education and family planning programs as well as sources of water on fertility, child mortality and schooling are obtained from combined district-level and household-level data from rural India. The estimates are used both to test the implications of a model of household decision-making and to assess the effectiveness of the joint, public provision of such services in shifting resources from increasing family size to augmenting human capital per person. The results appear consistent with household optimizing behavior and suggest that reductions in the costs of medical services, contraceptives and schooling and the improvement of water sources are mutually reinforcing alternatives for implementing the joint policy goals of reduced population growth and increased human capital formation.     

Demographic change and long‐term growth in China: Past developments and the future challenge of aging

This paper explores the influence of demographic changes, particularly the sharp decline in fertility and the evolution of the population age structure, on economic development in China. A general equilibrium overlapping generations model with endogenous decisions on fertility, educational investment, and factor accumulation is employed for our analysis. The family support provided by children to the elderly, which is a component of traditional culture in Chinese society, is also considered. We find that technological changes matter most for growth. Demographic changes, on average, account for approximately 4% of the growth in China, while the effect is negative in the pre‐1980 period. With an extension to include population aging, we find that aging is not necessarily adverse to growth. This finding reflects the fact that a longer life expectancy requires more savings and makes educational investment in children more attractive, which accelerates physical capital and human capital accumulation. However, if the social norm of family support for aging parents is strict, aging will significantly increase the children's burden and crowd out physical and human capital accumulation.     

How do epidemics induce behavioral changes?

This paper develops a theory of optimal fertility behavior under mortality shocks. In an OLG model, young adults determine their optimal fertility, labor supply and life-cycle consumption with both exogenous child and adult mortality risks. We show that a rise in adult mortality exerts an ambiguous effect on both net and total fertility in a general equilibrium framework, while child mortality shocks unambiguously lead to a rise in total fertility, leaving net fertility unchanged. We complement our theory with an empirical analysis using a sample of 39 Sub-Saharan African (SSA) countries over the 1980–2004 period, examining the overall effects of the child and adult mortality channels on both total and net fertility. We find child mortality to exert a robust, positive impact on total fertility but no impact on net fertility, whereas a rise in adult mortality is found to negatively influence both total and net fertility. Given the particular demographic profile of the HIV/AIDS epidemic (killing essentially young, active adults), we then conclude in favor of an unambiguous negative effect of the HIV/AIDS epidemic on net fertility in SSA.     

PRIVATE AND PUBLIC EDUCATION: HUMAN CAPITAL ACCUMULATION UNDER PARENTAL TEACHING*

This paper examines a simple overlapping generations model of human capital accumulation under both the public and private education regimes. Both young individuals and their parents allocate time to human capital accumulation. Under the public education regime, the government collects tax to finance expenditure for education resources. We show that there exists a level of tax which maximizes the speed of human capital accumulation because of parental teaching; and, if the government chooses tax rates adequately, human capital grows faster and welfare levels become higher under the public education regime than under the private.     

Redistribution, fertility, and growth: The effect of the opportunities abroad

This article analyzes the effect of the opportunities abroad on the growth path that a small open economy, in which redistribution policy in favor of less prosperous segments takes place, is expected to follow. The model shows that redistribution policy raises fertility among the unskilled recipients, lowers fertility among the contributing skilled, slows human capital accumulation, and reduces per-capita output growth. The paper demonstrates that the opportunities abroad determine the share of income redistributed and ultimately induce the offspring of the unskilled to invest in human capital and decrease their family size.     

ENVIRONMENTAL DYNAMICS AND THE LINKS BETWEEN GROWTH,VOLATILITY AND MORTALITY

I construct a model of a growing economy with pollution. The analysis of the model shows that the interactions between capital accumulation, endogenous lifetime and environmental quality determine both the long‐run growth rate and the pattern of convergence (i.e., monotonic or cyclical) towards the balanced growth path. I argue that such interactions can provide a possible explanatory factor behind the, empirically observed, negative correlation between growth and volatility. Furthermore, the model may capture the observed pattern whereby economic growth and mortality rates appear to be negatively related in the long run, but positively related in the short run.     

Low level equilibrium trap,unemployment, efficiency of education system,child labour and human capital formation

This paper builds an overlapping generations household economy model to examine the impact of adult unemployment on the human capital formation of a child and on child labour, as viewed through the lens of the adult’s expectations of future employability. The model indicates that the higher the adult unemployment rate in the skilled sector, the lesser is the time allocated by an unskilled adult towards schooling of her child. We also find that an increase in the unskilled adult’s wage may or may not decrease child labour in the presence of unemployment. The model predicts that an increase in child wage increases schooling and human capital growth rate only if the adults in the unskilled sector earn less than subsistence consumption expenditure. As the responsiveness of skilled wage to human capital increases, schooling and human capital growth rates increase. The model dynamics bring out the importance of education efficiency and parental human capital in human capital formation of the child. In the case of an inefficient education system, generations will be trapped into low level equilibrium. Only in the presence of an efficient education system, steady growth of human capital is possible. Suitable policies that may be framed to escape the child labour trap are discussed as well.     

Revisiting human capital and aggregate income differences

We revisit human capital and development accounting. In quantifying human capital, we split it into three components; schooling (years of education), cognitive skills (as proxied by test score results), and a health indicator (for which adult survival rates are used). Our calculations are reported for a substantive cross-section of countries for the year 2000. According to our most conservative estimates, the most complete measure of human capital accounts for 19–28% of differences in output per worker across countries, but when excluding the health component this value falls to 17–22%, and further to 13–14% when only considering schooling. We present group comparisons, finding for some regions values as large as 40–50%.     

Mortality risks,education and child labor

In this paper, we investigate the role of young adult mortality on child labor and educational decisions. We argue that mortality risks are a major source of risks in returns to education in developing countries. We show that, in the absence of appropriate insurance mechanisms, the level of child labor is inefficient, but it can be too high or too low. It is too high when parents are not very altruistic and anticipate positive transfers from their children in the future. Uncertain returns to education, endogenous mortality or imperfect capital markets unambiguously increase child labor. When the level of child labor is inefficiently high, we also show that a cash transfer conditional on child's schooling can always restore efficiency regarding child labor.     

Having It All? Employment,Earnings, and Children*

We study the effect of family policies on female employment, fertility, and the gender wage gap. We develop a life‐cycle model of heterogeneous households featuring endogenous labor supply, human capital accumulation, fertility, and home production. Our results suggest that human capital accumulation is important in accounting for the widening of the gender wage gap following children. We find that, in aggregate, childcare subsidies promote maternal employment and fertility, although the effects are heterogeneous across couples. A subsidy on home goods increases female employment, but primarily later in life. Thus, it does not dampen the widening of the gender gap.     

Gender‐specific Human Capital,Openness and Growth: Exploring the Linkages for South Asia

Using data covering 1970–2008 for South Asia, this study investigates the influence of human capital disaggregated by gender, on economic growth. We use an extended version of the Solow growth model with per capita gross domestic product (GDP) a function of the key variables, viz. physical capital accumulation, human capital accumulation, trade openness and capital flows, fiscal policy and financial development. The key contribution of this study is to show that openness when interacted with the human capital stock disaggregated by gender, has differential impacts on economic growth. While the positive impact of male secondary schooling captures the direct skill effect relative to primary schooling, the marginal influence of female primary/secondary schooling fails to show a positive impact on growth at higher levels of openness. An implication stemming from this study is that educational opportunities for females at the secondary level should be increased for South Asia.     

Fertility and development: the roles of schooling and family production

This paper presents a quantitative theory of development that highlights three mechanisms that relate schooling, fertility, and growth. First, we point out that in the early stages of development, fertility and schooling may rise together as the schooling of younger children increases their relative contribution to family income when they turn working age. Second, the model contains a supply-side theory of schooling that generates a rise in schooling independent of technological change. Third, we introduce a direct negative effect of industrialization on fertility that does not operate through human capital and the quantity-quality tradeoff. An initial quantitative assessment of the theoretical mechanisms is conducted by calibrating and applying the model to United States history from 1800 to 2000. We find that the demise in family production is an important factor reducing fertility in the 19th century and schooling of older children is dominant factor reducing fertility in the 20th century. The same model is applied to England from 1740 to 1940, where we offer two complimentary explanations for the rise in fertility from 1740 to 1820. The first is based on the rapid expansion in the cottage industry and the second on the increased relative productivity of children. We also find that the subsequent fall in fertility from 1820 to 1940 cannot be explained without introducing child labor/compulsory schooling laws.     

The role of human capital and innovation in economic development: evidence from post-Malthusian Prussia

The effect of human capital on growth involves multiple channels. On the one hand, an increase in human capital directly affects economic growth by enhancing labor productivity in production. On the other hand, human capital is an important input into R&D and therefore increases labor productivity indirectly by accelerating technological change. In addition, different types of human capital such as basic and higher education or training-on-the-job might play different roles in both production and innovation activities. We merge individual data on valuable patents granted in Prussia in the late nineteenth-century with county-level data on literacy, craftsmanship, secondary schooling, and income tax revenues to explore the complex relationship between various types of human capital, innovation, and income. We find that the Second Industrial Revolution can be seen as a transition period when it comes to the role of human capital. As in the preceding First Industrial Revolution, “useful knowledge” embodied in master craftsmen was related to innovation, especially of independent inventors. As in the subsequent twentieth century, the quality of basic education was associated with both workers’ productivity and firms’ R&D processes. In a final step, we show that literacy had also a negative effect on fertility which increased with innovation. In general, our findings support the notion that the accumulation of basic human capital was crucial for the transition to modern economic growth.