ABSTRACT The connection between increased survival rates and individuals' schooling, labor, and retirement decisions has been widely studied in the existing literature. While the directional impact of this theoretical mechanism is well known, additional work is needed to better understand its strength. To this end, we use a perfect foresight lifecycle model with endogenous schooling and retirement decisions to determine the extent to which the empirically observed increases in survival rates can capture the labor force participation rate patterns observed in recent U.S. data, both on average and at the two extremes of the age distribution. While our preferred specification works well in capturing the observed patterns, an alternative scenario that does not allow agents to alter their schooling and retirement decisions following a change in survival rates is found to contradict the observed trends.
Atolia et al. (Thu,) studied this question.