Faculty of Economics and Business Administration Publications Database

Mortality, fertility, education and capital accumulation in a simple OLG economy

Vogel, Edgar
Volume: 23
Number: 2
Pages: 703 - 735
Month: March
ISSN-Print: 0933-1433
Link External Source: Online Version
Year: 2010
Keywords: Mortality; Fertility; Aging; Education; OLG

We develop a simple OLG model to analytically show that aging leads to increased educational efforts through a general equilibrium effect. The mechanism is that scarcity of raw labor increases the return of human relative to physical capital. While a reduction in the birth rate is shown to unambiguously increase educational efforts, increases in the survival rate have ambiguous effects. Falling birth rates also increase capital per worker, but the effects of rising survival rates are again ambiguous. We conclude that our model is a useful laboratory to highlight potentially offsetting effects in models with endogenous education and overlapping generations.