Impact of mortality reductions on years of schooling and expected lifetime labor supply

Abstract

Hazan (2009) performs empirical analysis based on the conjecture that a necessary condition for mortality decline to cause longer years of schooling is that it also increases expected lifetime labor supply, and reaches controversial conclusions. We aim to examine the theoretical validity of Hazan’s (2009) conjecture, and more generally, to understand the relation between these two conditions in a standard life-cycle model. We find that the relation between the effects on optimal years of schooling and expected lifetime labor supply differs systematically with respect to mortality reductions at different stages of the life cycle. Based on these systematic differences, we find that longer lifetime labor supply is not sufficient for increased years of schooling for all mortality reductions occurring during the schooling phase, and not necessary for increased years of schooling for some mortality reductions during the working phase.