Does life expectancy affect human capital investment?
Pro Research Analysisby 
Searched over 200M research papers
Consensus Meter
The Impact of Life Expectancy on Human Capital Investment
Introduction
Life expectancy is a critical factor influencing human capital investment. Human capital theory posits that longer life expectancy increases the value of investments in education and health, as individuals anticipate a longer period to reap the benefits of these investments. This article synthesizes findings from multiple research studies to explore how variations in life expectancy affect human capital investment.
Life Expectancy and Education
Education Attainment and Life Expectancy
Several studies have demonstrated a positive relationship between life expectancy and educational attainment. For instance, research using data from individuals with Huntington disease (HD) shows that those with a higher risk of HD, and thus a shorter life expectancy, tend to invest less in education and job training. The elasticity of demand for college attendance with respect to life expectancy is approximately 1.0, indicating a strong correlation between the two variables.
Historical Evidence from Maternal Mortality Declines
Historical data also supports the link between life expectancy and education. A study examining the sharp decline in maternal mortality in Sri Lanka between 1946 and 1953 found that the resulting increase in life expectancy for school-age girls led to significant improvements in female literacy and years of education. Specifically, a 70% reduction in maternal mortality risk increased female life expectancy at age 15 by 4.1%, female literacy by 2.5%, and female years of education by 4.0%.
International Epidemiological Transition
Further evidence comes from the international epidemiological transition during the mid-20th century. Medical breakthroughs that reduced mortality from infectious diseases led to significant increases in life expectancy, which in turn boosted human capital formation. For each additional year of life expectancy, years of schooling increased by 0.17 years, highlighting the substantial impact of improved health on education.
Health Investments and Life Expectancy
Health Capital Response
The relationship between life expectancy and health investments is also noteworthy. Individuals with longer life expectancies are more likely to invest in health-related behaviors, such as smoking cessation and cancer screening, as these investments yield benefits over a longer period.
Economic Growth and Human Capital
Endogenous Growth Models
The interplay between life expectancy, human capital, and economic growth is complex. Some models suggest that increased life expectancy can enhance economic growth by extending the working period and increasing the return on human capital investments. However, this effect is contingent on simultaneous increases in the retirement age. Without such adjustments, the proportion of retirees grows, potentially offsetting the benefits of longer life expectancy on growth rates.
Long-Run Evidence
Longitudinal studies examining data from multiple countries over extended periods provide robust evidence of the long-term impact of life expectancy on human capital investment. For example, a study covering 14 countries from 1870 to 2010 found a statistically significant long-run effect of life expectancy on schooling, with causality running from life expectancy to education.
Conclusion
In summary, life expectancy significantly influences human capital investment, particularly in education and health. Longer life expectancy encourages greater investment in education, as individuals anticipate a longer period to benefit from their educational achievements. This relationship is evident across various contexts, from historical declines in maternal mortality to international epidemiological transitions. Additionally, the impact of life expectancy on economic growth underscores the importance of considering retirement age and labor supply in policy discussions. Overall, enhancing life expectancy can be a powerful lever for boosting human capital and fostering economic development.
Sources and full results
Most relevant research papers on this topic