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The Intergenerational Overlap and Human Capital Formation

Author

Listed:
  • Oded Stark
  • Yong Wang
Abstract
A new microeconomic explanation for the divergent experiences of economies in forming human capital is proposed. It is suggested that the positive effect of a longer life expectancy on human capital formation arises from two separate effects: a life‐expectancy effect and a prolonged intergenerational overlap effect. It is argued that the duration of the overlap between generations and the associated parental support can affect the marginal cost of human capital formation and hence its level: parental support is cheaper than market financing. The strong correlation between the formation of human capital and life expectancy is thus attributed not merely to a higher marginal benefit arising from a longer payback period but also to a lower marginal cost arising from a prolonged intergenerational overlap. Conditions are provided under which a longer overlap results in a higher level of per capita output.

Suggested Citation

  • Oded Stark & Yong Wang, 2005. "The Intergenerational Overlap and Human Capital Formation," Review of International Economics, Wiley Blackwell, vol. 13(1), pages 45-58, February.
    • Handle: RePEc:bla:reviec:v:13:y:2005:i:1:p:45-58
    DOI: 10.1111/j.1467-9396.2005.00491.x
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    File URL: https://doi.org/10.1111/j.1467-9396.2005.00491.x
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    References listed on IDEAS

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    1. Kalemli-Ozcan, Sebnem & Ryder, Harl E. & Weil, David N., 2000. "Mortality decline, human capital investment, and economic growth," Journal of Development Economics, Elsevier, vol. 62(1), pages 1-23, June.
    2. Michael C. M. Leung & Yong Wang, 2010. "Endogenous Health Care, Life Expectancy And Economic Growth," Pacific Economic Review, Wiley Blackwell, vol. 15(1), pages 11-31, February.
    3. Ita Falk & Oded Stark, 2001. "Dynasties and Destiny: On the Roles of Altruism and Impatience in the Evolution of Consumption and Bequests," Economica, London School of Economics and Political Science, vol. 68(272), pages 505-518, November.
    4. Wang, Yong & Michael C M Leung, 2003. "Endogenous Health Care, Life Expectancy, and Economic Development," Royal Economic Society Annual Conference 2003 218, Royal Economic Society.
    5. Stark,Oded, 1999. "Altruism and Beyond," Cambridge Books, Cambridge University Press, number 9780521663731.
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    Cited by:

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    2. Foreman-Peck, James, 2011. "The Western European marriage pattern and economic development," Explorations in Economic History, Elsevier, vol. 48(2), pages 292-309, April.

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    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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