IDEP Conferences, 11th journées Louis-André Gérard-Varet

Font Size: 
Education, life expectancy and family bargaining: the Ben-Porath effect revisited
Laura Leker, Gregory Ponthiere

Last modified: 2012-06-07


Following Ben-Porath (1967), the influence of life expectancy on education has attracted much attention. Whereas existing growth models rely on an education decision made either by the child or by his parent, we revisit the Ben-Porath effect when the education is the outcome of a bargaining between the parent and the child. We develop a three-period OLG model with human capital accumulation and endogenous life expectancy, and show that, as a result of the unequal life horizons faced by parents and children, the Ben-Porath effect depends on the distribution of bargaining power within the family, which in turn affects the long-run dynamics of the economy. Using data on 17 OECD countries (1940-1980), we show that the introduction of intergenerational bargaining on education helps to rationalize the observed education patterns across countries.

Full Text: PAPER