Human Capital Formation, Life Expectancy, and the Process of Development
- (pp. 1653-1672)
AbstractWe provide a unified theory of the transition in income, life expectancy, education, and population size from a nondeveloped environment to sustained growth. Individuals optimally trade off the time cost of education with its lifetime returns. Initially, low longevity implies a prohibitive cost for human capital formation for most individuals. A positive feedback loop between human capital and increasing longevity, triggered by endogenous skill-biased technological progress, eventually provides sufficient returns for widespread education. The transition is not based on scale effects and induces population growth despite unchanged fertility. A simulation illustrates that the dynamics fit historical data patterns.
CitationCervellati, Matteo, and Uwe Sunde. 2005. "Human Capital Formation, Life Expectancy, and the Process of Development." American Economic Review, 95 (5): 1653-1672. DOI: 10.1257/000282805775014380
- J11 Demographic Trends, Macroeconomic Effects, and Forecasts
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- N33 Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: Pre-1913
- N34 Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Europe: 1913-