The Link between parental longevity and the human capital of their offspring

We develop an overlapping generations model where adult agents finance the education of their offspring and also undertake certain health expenditures aimed at improving their own longevity. We show that for agents with incomes exceeding a certain threshold value, health expenditure is a necessity, while it is a luxury for others. Another threshold value of income exists such that, for agents with incomes below this value, longevity enhancing health expenditures and the education of offspring are gross substitutes, but are gross complements for agents with incomes above this value. We show that as long as the intertemporal elasticity of substitution is below a particular threshold, a positive association between parental longevity and offspring’s human capital is present for all agents in the economy. How ever, if the intertemporal elasticity of substitution is above this value, there may be a negative association between parental longevity and offspring’s human capital for the poorer agents in the economy, with incomes below a certain value. This could translate into a negative link between the expected longevity of parents and their offspring, thereby resulting in intergenerational inequalities in longevity