Skip to main content

The uncertain lifetime and the timing of human capital investment

Abstract

I examine the effects of mortality decline on fertility and human capital investment decision of parents taking into account the uncertainty about child survival. I propose a model, where parents decide on their fertility before the uncertainty is realized, but they choose to invest only in human capital of their surviving children. The model implies a positive relationship between mortality and fertility and a negative one between mortality and educational investment. It has been argued elsewhere that as, in reality, most of the mortality decline occurred in infancy, it should not affect the human capital investment decision, which comes later in life. Thus, increased survival chances should not promote growth by raising the human capital investment. This paper argues the contrary and proposes a mechanism where mortality decline at any age before the teen years can promote growth by raising human capital investment regardless of the timing of the educational investment.

This is a preview of subscription content, access via your institution.

References

  • Becker GS, Barro RJ (1988) A reformulation of the economic theory of fertility. Q J Econ 103:1–25

    Article  Google Scholar 

  • Boldrin M, Jones LE (2002) Mortality, fertility, and saving in a malthusian economy. Rev Econ Dyn 5(4):775–814

    Article  Google Scholar 

  • Chakraborty S (2004) Endogenous lifetime and economic growth. J Econ Theory 116:25–64

    Article  Google Scholar 

  • Cigno A (1998) Fertility decisions when infant survival is endogenous. J Popul Econ 11:21–28

    Article  Google Scholar 

  • Eckstein Z, Mira P, Wolpin KI (1998) A quantitative analysis of swedish fertility dynamics, 1751–1990. CEPR discussion Paper 1832

  • Doepke M (2005) Child mortality and fertility decline: does the barro-becker model fit the facts? J Popul Econ 18(2):337–366

    Article  Google Scholar 

  • Galor O (2005) The demographic transition and the emergence of sustained economic growth. J Eur Econ Assoc 3:494–504

    Google Scholar 

  • Ehrlich I, Lui FT (1991) Intergenerational trade, longevity, intrafamily transfers and economic growth. J Polit Econ 99:1029–1059

    Article  Google Scholar 

  • Kalemli-Ozcan S (2000) Uncertainty and economic growth. Ph.D. Dissertation, Brown University

  • Kalemli-Ozcan S (2002) Does mortality decline promote economic growth? J Econ Growth 7(4):411–439

    Article  Google Scholar 

  • Kalemli-Ozcan S (2003) A stochastic model of mortality, fertility and human capital investment. J Dev Econ 70(1):103–118

    Article  Google Scholar 

  • Kalemli-Ozcan S, Ryder H, Weil DN (2000) Mortality decline, human capital investment and economic growth. J Dev Econ 62(1):1–23

    Article  Google Scholar 

  • Keyfitz N, Flieger W (1968) World population: an analysis of vital data. The University of Chicago Press, Chicago

    Google Scholar 

  • Keyfitz N, Flieger W (1990) World population growth and aging. The University of Chicago Press, Chicago

    Google Scholar 

  • Livi-Bacci M (1997) A concise history of world population. Oxford University Press, UK

    Google Scholar 

  • Lorentzen P, McMillan J, Wacziarg R (2004) Death and development. Mimeo, Stanford University

  • Matthews RCO, Feinstein CH, Odling-Smee JC (1982) British economic growth, 1856–1973. Stanford University Press, CA

    Google Scholar 

  • Meltzer D (1992) Mortality decline, the demographic transition and economic growth. Ph.D. Dissertation, University of Chicago

  • Parente SL, Prescott EC (2000) Barriers to Riches. MIT Press, Cambridge

    Google Scholar 

  • Ram R, Schultz T (1979) Life span, health, savings and productivity. Econ Dev Cult Change 13:399–421

    Article  Google Scholar 

  • Sah RK (1991) The effects of child mortality changes on fertility choice and parental welfare. J Polit Econ 99:582–606

    Article  Google Scholar 

  • Schultz PT (1997) Demand for children in low income countries. In: Rosenzweig MR, Stark O (eds) Handbook of Population and Family Economics. Elsevier, Amsterdam

    Google Scholar 

  • Soares RP (2005) Mortality reductions, educational attainment, and fertility choice. Amer Econ Rev 95(3):580–601

    Article  Google Scholar 

  • Strulik H (2003) Mortality, the trade-off between child quality and quantity, and demo-economic development. Metroeconomica 54(4):499–520

    Article  Google Scholar 

  • Strulik H (2004) Child mortality, child labor and economic development. Econ J 114:547–568

    Article  Google Scholar 

  • Wolpin KI (1997) Determinants and consequences of the mortality and health of infants and children. In: Rosenzweig MR, Stark O (eds) Handbook of population and family economics. Elsevier, Amsterdam, The Netherlands

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Sebnem Kalemli-Ozcan.

Additional information

Responsible editor : Alessandro Cigno

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Kalemli-Ozcan, S. The uncertain lifetime and the timing of human capital investment. J Popul Econ 21, 557–572 (2008). https://doi.org/10.1007/s00148-007-0145-8

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00148-007-0145-8

Keywords

  • Human capital investment
  • Survival probability
  • Economic growth

JEL Classification

  • O40
  • I12
  • J11