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

43 Pages Posted: 21 Oct 2002

See all articles by Matteo Cervellati

Matteo Cervellati

University of Bologna - Department of Economics; Institute for the Study of Labor (IZA); Instituto de Análisis Económic (IAE) Barcelona

Uwe Sunde

Ludwig Maximilian University of Munich (LMU)

Date Written: September 2002

Abstract

This paper presents a microfounded theory of long-term development. We model the interplay between economic variables, namely the process of human capital formation and technological progress, and the biological constraint of finite lifetime expectancy. All these processes affect each other and are endogenously determined. The model is analytically solved and simulated for illustrative purposes. The resulting dynamics reproduce a long period of stagnant growth as well as an endogenous and rapid transition to a situation characterized by permanent growth. This transition can be interpreted as industrial revolution. Historical and empirical evidence is discussed and shown to be in line with the predictions of the model.

Keywords: Long-term Development, Endogenous Lifetime Duration, Endogenous Life Expectancy, Human Capital, Technological Progress, Growth Externalities, Industrial Revolution

JEL Classification: E10, J10, O10, O40, O41

Suggested Citation

Cervellati, Matteo and Sunde, Uwe, Human Capital Formation, Life Expectancy and the Process of Economic Development (September 2002). Available at SSRN: https://ssrn.com/abstract=340322 or http://dx.doi.org/10.2139/ssrn.340322

Matteo Cervellati

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39-2092605 (Phone)
+39-2092664 (Fax)

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/

Instituto de Análisis Económic (IAE) Barcelona

Barcelona, Bellaterra 08193
Spain

Uwe Sunde (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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