Endogenous lifetime, intergenerational mobility and economic development

Aso, Hiroki (2020): Endogenous lifetime, intergenerational mobility and economic development.

Abstract

This paper analyzes the interactions among lifetime, intergenerational mobility and economic development in overlapping generations framework. In addition, we explain the mechanism that causes two motions of intergenerational mobility, monotonous motion and cyclical motion, which are observed in empirical studies. We show that these motions of mobility depend crucially on lifetime. We assume that lifetime increases through health effect with economic development. Increasing lifetime encourages incentives of education investment while decreasing transfer, which is the funding source for education. If lifetime slowly increases sufficiently, mobility monotonically increases while income inequality decreases. However, if lifetime increases rapidly with economic development, the economy exhibits cyclical and even chaotic behavior. Even if we consider that differential lifetime between the educated and the uneducated, we get two motions of mobility: monotonous and cyclical motion.

• Item Type: MPRA Paper
• Language: English
• Subjects: I - Health, Education, and Welfare > I1 - Health > I15 - Health and Economic Development; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I24 - Education and Inequality; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J62 - Job, Occupational, and Intergenerational Mobility

References

Acemoglu, D., Johnson, S. 2007. Disease and development: the effect of life expectancy on economic growth. Journal of Political Economy. 115(6), 925-985. https://doi.org/10.1162/154247603322391035. Aso, H., Nakamura, T. 2020. Population growth and intergenerational mobility, Applied Economic Letters, 27(13), 1076-1080. https://doi.org/10.1080/13504851.2019.1660759. Bratberg, E. Nilsen, Q.A., Vaage, K. 2007. Trends in Intergenerational Mobility across Offspiring’s Eqanings Distribution in Norway. Industrial Relations, 46, pp.112-119. https://doi.org/10.1016/j.jedc.2006.07.007. Cellverati, M., Sunde, U. 2005. Human capital formation, life expectancy, and the process of development. American Economic Review. 95(5), 1653-1672. https://doi.org/ 10.1257/000282805775014380. Cellverati, M., Sunde, U. 2011. Life expectancy and economic growth: the role of demographic transition. Journal of Economic Growth. 16(2), 99-133. https://doi.org/10.1007/s10887-011-9065-2. Chen, H.J. 2010. Life expectancy, fertility, and educational investment, Journal of Population Economics, 23, 37-56. https://doi.org/10.1007/s00148-008-0202-y. Davies, J.B., Zhang, J., Zeng, J. 2005. Intergenerational mobility under private vs public education. Scandinavian Journal of Economics. 107, 399-417. https://doi.org/10.1111/j.1467-9442.2005.00415.x. Fan, C.S., Zhang, J. 2013. Differential fertility and intergenerational mobility under the private versus public education. Journal of Population Economics. 26, 907-41. https://doi.org/10.1007/s00148-012-0445-5. Fanti, L., Gori, L. 2014. Endogenous fertility, endogenous lifetime and economic growth: the role of child policies. Journal of Population Economics. 27, 529-564. https://doi.org/10.1007/s00148-013-0472-x. Galor, O., Tsiddon, D. 1997. Technological progress, mobility, and economic growth. American Economic Review. 87, 363-382. https://www.jstor.org/stable/2951350. Galor, O., Zeira, J. 1993. Income distribution and macroeconomics. Review of Economic Studies. 60, 35-52. https://doi.org/10.2307/2297811. Iyigun, M.F. 1999. Public education and intergenerational economic mobility. International Economic Review. 40, 697-710. https://doi.org/10.1111/1468-2354.00035. Jin, M., Bai, X., Li, XK., Shi, W. 2019). Are we born equal: a study of intergenerational income mobility in China, Journal of Demographic Economics, 85, 1-19.　 https://doi.org/10.1017/dem.2018.19. Maoz, Y.D., Moav, O. 1999. Intergenerational mobility and the process of development. Economic Journal. 109, 677-697. https://doi.org/10.1111/1468-0297.00468. Murayama, Y. 2019. Cash transfers, intergenerational mobility, and the process of development. Bulletin of Economic Research. 71, 209-218. https://doi.org/10.1111/boer.12174. OECD. 2017. Health at a Glance 2017: OECD Indicators. OECD publishing.　 https://doi.org/10.1787/health_glance-2017-en. Owen, A.L., Weil, D.N. 1998. Intergenerational earnings mobility, inequality and growth. Journal of Monetary Economics. 41,71-104. https://doi.org/10.1016/S0304-3932(97)00067-6. Strulik, H. 2018. The return to education in terms of wealth and health. Journal of the Economics of Ageing. 12, 1-14. https://doi.org/10.1016/j.jeoa.2017.11.001. Zhang, J., Zhang, J., Lee, R. 2001. Mortality decline and long-run economic growth. Journal of Public Economics. 80, 485-507. https://doi.org/10.1016/S0047-2727(00)00122-5.