Publicação
Life cycles with endogenous time allocation and age-dependent mortality
| Resumo: | The negative effect of population aging on the economy can be mitigated by a behavioral effect of people as a reaction to a higher life expectancy. We analyze the optimal life-cycle of individuals that allocate time at the intensive margin between leisure, human capital accumulation, and labor supply while facing an age-dependent mortality. This allows to enhance effects of changes in life expectancy on labor supply and human capital accumulation and to uncover trade-offs between time allocations at different stages of the life-cycle. Our life-cycles are characterized by on the job training throughout all the working life with a possibility of a temporary exit from the labor market. We simulate the model numerically and find that with a higher life expectancy, labor supply increases at the intensive margin and the individual invests more in human capital. We also find a willingness to increase labor supply at the extensive margin. |
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| Autores principais: | Guerra, Manuel |
| Outros Autores: | Pereira, João; St. Aubyn, Miguel |
| Assunto: | Life-Cycle Age-Dependent Mortality Aging Time Allocation |
| Ano: | 2018 |
| País: | Portugal |
| Tipo de documento: | working paper |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade de Lisboa |
| Idioma: | inglês |
| Origem: | Repositório da Universidade de Lisboa |
| Resumo: | The negative effect of population aging on the economy can be mitigated by a behavioral effect of people as a reaction to a higher life expectancy. We analyze the optimal life-cycle of individuals that allocate time at the intensive margin between leisure, human capital accumulation, and labor supply while facing an age-dependent mortality. This allows to enhance effects of changes in life expectancy on labor supply and human capital accumulation and to uncover trade-offs between time allocations at different stages of the life-cycle. Our life-cycles are characterized by on the job training throughout all the working life with a possibility of a temporary exit from the labor market. We simulate the model numerically and find that with a higher life expectancy, labor supply increases at the intensive margin and the individual invests more in human capital. We also find a willingness to increase labor supply at the extensive margin. |
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