Education, life expectancy and family bargaining: the Ben-Porath effect revisited

Following Ben-Porath [1967. “The Production of Human Capital and the Life-Cycle of Earnings.” Journal of Political Economy 75 (3): 352–365], the influence of life expectancy on education and on human capital has attracted much attention among growth theorists. Whereas existing growth models rely on an education decision made either by the child or by his parent, we revisit the Ben-Porath effect by modelling education as the outcome of bargaining between the parent and the child. We develop a three-period overlapping generations (OLG) model, where human capital increases life expectancy and shows that as a result of the unequal remaining lifetimes faced by parents and children, the form of the Ben-Porath effect depends on how bargaining power is distributed within the family, which in turn affects long-run economic dynamics. Using data on 16 OECD countries (1940–1980), we show that introducing family bargaining helps to rationalize the observed education patterns across countries.

[1]  Marcelo Soto,et al.  Growth and human capital: good data, good results , 2001 .

[2]  D. Lam,et al.  Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil , 1993, Journal of Political Economy.

[3]  A. Coale,et al.  The demographic transition. , 1984, Pakistan development review.

[4]  Matthias Doepke,et al.  Does female empowerment promote economic development? , 2011, Journal of Economic Growth.

[5]  Raouf Boucekkine,et al.  Vintage Human Capital, Demographic Trends, and Endogenous Growth , 2002, J. Econ. Theory.

[6]  G. Ponthiere.  Unequal longevities and lifestyles transmission , 2010 .

[7]  Ronald Lee,et al.  Mortality decline and long-run economic growth , 2001 .

[8]  Duncan C. Thomas,et al.  Investments, Time Preferences, and Public Transfers Paid to Women , 2009, Economic Development and Cultural Change.

[9]  Dirkje S Postma,et al.  The child is father of the man? , 2014, American journal of respiratory and critical care medicine.

[10]  David de la Croix,et al.  Adult Longevity and Economic Take-off: from Malthus to Ben-Porath , 2008 .

[11]  Uwe Sunde,et al.  Life expectancy and economic growth: the role of the demographic transition , 2009, SSRN Electronic Journal.

[12]  David de la Croix,et al.  The Child is Father of the Man: Implications for the Demographic Transition , 2007 .

[13]  R. Soares,et al.  Mortality Reductions, Educational Attainment, and Fertility Choice. , 2005, The American economic review.

[14]  G. Cipriani,et al.  A model of longevity, fertility and growth , 2002 .

[15]  Bo Malmberg,et al.  Demographic change and economic growth in Sweden: 1750-2050 , 2009 .

[16]  R. Easterlin.  How beneficent is the market? A look at the modern history of mortality. , 1999, European review of economic history.

[17]  Peter L. Lorentzen,et al.  Death and development , 2005 .

[18]  Kai A. Konrad,et al.  The bargaining family revisited , 2000 .

[19]  Shankha Chakraborty,et al.  Endogenous lifetime and economic growth , 2004, J. Econ. Theory.

[20]  Y. Ben-Porath.  The Production of Human Capital and the Life Cycle of Earnings , 1967, Journal of Political Economy.

[21]  Allan Drazen,et al.  Threshold Externalities in Economic Development , 1990 .

[22]  D. Cohen,et al.  Health and Education: Another Look with the Proper Data , 2014 .

[23]  U. Sunde,et al.  The Economic and Demographic Transition, Mortality, and Comparative Development , 2008, SSRN Electronic Journal.

[24]  Francis T. Lui,et al.  Intergenerational Trade, Longevity, and Economic Growth , 1991, Journal of Political Economy.

[25]  U. Sunde,et al.  Human Capital, Mortality and Fertility: A Unified Theory of the Economic and Demographic Transition , 2007, SSRN Electronic Journal.

[26]  Robert J. Barro,et al.  Fertility Choice In A Model Of Economic Growth , 1989 .

[27]  G. Becker,et al.  Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition , 1993 .

[28]  Daron Acemoglu,et al.  Disease and Development: The Effect of Life Expectancy on Economic Growth , 2006, Journal of Political Economy.

[29]  P. Romer.  Endogenous Technological Change , 1989, Journal of Political Economy.

[30]  D. Cohen,et al.  Why are poor countries poor , 2004 .

[31]  R. Easterlin.  How beneficent is the market? A look at the modern history of mortality. , 1999, European review of economic history.

[32]  David de la Croix,et al.  Would empowering women initiate the demographic transition in least-developed countries? , 2010 .

[33]  Uwe Sunde,et al.  Human Capital Formation, Life Expectancy, and the Process of Development. , 2005, The American economic review.

[34]  R. Lucas.  On the Mechanics of Economic Development , 1988 .

[35]  G. Ponthiere.  Asymptotic Age Structures and Intergenerational Trade , 2011 .

[36]  Dmitri A. Jdanov,et al.  Human Mortality Database , 2019, Encyclopedia of Gerontology and Population Aging.

[37]  Hans Steiner,et al.  The Child is Father of the Man , 2012 .

[38]  Raouf Boucekkine,et al.  Early Mortality Declines at the Dawn of Modern Growth , 2003 .

[39]  Disease and Development: The Effect of Life Expectancy on Economic Growth , 2006 .