Human Capital Formation, Life Expectancy, and the Process of Development
Journal
American Economic Review
ISSN
0002-8282
ISSN-Digital
1944-7981
Type
journal article
Date Issued
2005-12-01
Author(s)
Cervellati, Matteo
;
Sunde, Uwe
Abstract
We 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.
Language
English
Keywords
Long-term Development
Endogenous Lifetime Duration
Endogenous Life Expectancy
Human Capital
Technological Progress
Growth Externalities
Industrial Revolution
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
American Economic Association
Publisher place
Nashville, TN 37203
Volume
95
Number
5
Start page
1653
End page
1672
Pages
20
Subject(s)
Division(s)
Eprints ID
43870