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Human Capital Formation, Life Expectancy, and the Process of Development

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Author Info
Matteo Cervellati
Uwe Sunde

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Abstract

We provide a unified theory of the transition in income, life expectancy, education, and population size from a nondeveloped environment to sustained growth. Individuals optimally trade off the time cost of education with its lifetime returns. Initially, low longevity implies a prohibitive cost for human capital formation for most individuals. A positive feedback loop between human capital and increasing longevity, triggered by endogenous skill-biased technological progress, eventually provides sufficient returns for widespread education. The transition is not based on scale effects and induces population growth despite unchanged fertility. A simulation illustrates that the dynamics fit historical data patterns.

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 95 (2005)
Issue (Month): 5 (December)
Pages: 1653-1672
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Handle: RePEc:aea:aecrev:v:95:y:2005:i:5:p:1653-1672

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Matthias Doepke, . "Growth Takeoffs," UCLA Economics Online Papers 409, UCLA Department of Economics. [Downloadable!]
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  2. Aiyar, Shekhar & Dalgaard, Carl-Johan & Moav, Omer, 2006. "Technological Progress and Regress in Pre-Industrial Times," CEPR Discussion Papers 5454, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Amparo Castello-Climent & Rafael Domenech, 2006. "Human Capital Inequality, Life Expectancy and Economic Growth," Working Papers 0604, International Economics Institute, University of Valencia. [Downloadable!]
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  4. DE LA CROIX, David & SOMMACAL, Alessandro, 2006. "A theory of medicine effectiveness, differential mortality, income inequality and growth for pre-industrial England," CORE Discussion Papers 2006045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
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  5. David de la Croix & Grégory Ponthière, 2008. "On the Golden Rule of capital accumulation under endogenous longevity," PSE Working Papers 2008-48, PSE (Ecole normale supérieure). [Downloadable!]
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  6. Jörg Baten & Jan Luiten van Zanden, 2007. "Book Production and the Onset of Modern Economic Growth," Economics Working Papers 1030, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  7. Javier Birchenall, 2007. "Escaping high mortality," Journal of Economic Growth, Springer, vol. 12(4), pages 351-387, December. [Downloadable!] (restricted)
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  9. Peter Lorentzen & John McMillan & Romain Wacziarg, 2008. "Death and development," Journal of Economic Growth, Springer, vol. 13(2), pages 81-124, June. [Downloadable!] (restricted)
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  10. de la Croix, David & Licandro, Omar, 2007. "‘The Child is Father of the Man:’ Implications for the Demographic Transition," CEPR Discussion Papers 6493, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. Brian A'Hearn & Jörg Baten & Dorothee Crayen, 2006. "Quantifying Quantitative Literacy: Age Heaping and the History of Human Capital," Economics Working Papers 996, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  12. Oded_Galor & Omer Moav, 2004. "Natural Selection and the Evolution of Life Expectancy," Working Papers 2004-14, Brown University, Department of Economics. [Downloadable!]
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  13. Holger Strulik & Jacob Weisdorf, 2008. "Birth, Death, and Development: A Simple Unified Growth Theory," Discussion Papers 08-32, University of Copenhagen. Department of Economics. [Downloadable!]
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  14. Jörg Baten & Dorothee Crayen, 2008. "Global Trends in Numeracy 1820-1949 and its Implications for Long-Run Growth," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  15. David de la Croix & Omar Licandro, 2008. "The Child is Father of the Man: by Implications for the Demographic Transition," Working Papers 2008-04, FEDEA. [Downloadable!]
  16. David, DE LA CROIX, 2008. "Adult longevity and economic take-off : from Malthus to Ben-Porath," Discussion Papers 2008031, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
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