Mortality decline, human capital investment, and economic growth

We examine the role of increased life expectancy in raising human capital i nvestment during the process of economic growth. We develop a continuous ti me, overlapping generations model in which individuals make optimal schooli ng investment choices in the face of a constant probability of death. We pr esent analytic results, followed by results from a calibrated version of th e model using realistic estimates of the return to schooling. Mortality dec line produces economically significant increases in schooling and consumpti on. Allowing schooling to vary endogenously produces a much larger response of consumption and capital to mortality decline than is observed when scho oling is held Bred. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: I12; I20; O11; O40.