Human-capital formation: The importance of endogenous longevity.

We present a theory of human capital, with health, skill, and longevity, endogenously determined. Using comparative dynamic analyses and a calibrated version of the theory, we uncover an important economic mechanism driving human-capital formation: whether individuals can influence their longevity. When they can, additional resources are invested in human capital. When they cannot, additional resources are used for consumption and leisure, i.e., "non-productively". These findings point to the potential importance of endogenous longevity as an economic mechanism driving human-capital formation, and, by extension, human capital-based economic growth.