The Intergenerational Overlap and Human Capital Formation

Stark, Oded and Wang, Yong (March 2004) The Intergenerational Overlap and Human Capital Formation. Former Series > Working Paper Series > IHS Economics Series 152


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Abstract: We propose a new microeconomic explanation for the divergent experiences of economies in forming human capital. We suggest 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. We argue 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. We thus attribute the strong correlation between the formation of human capital and life expectancy 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. We provide conditions under which a longer overlap results in a higher level of per-capita output.;

Item Type: IHS Series
Keywords: 'Duration of intergenerational overlap' 'Parental support' 'Human capital formation' 'Social welfare'
Classification Codes (e.g. JEL): D91, J24
Date Deposited: 26 Sep 2014 10:37
Last Modified: 26 Sep 2019 16:52
ISBN: 1605-7996

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