Human capital and consumation over the live cycle: a synthesis

This paper presents a life cycle model that contains the Beckers (1975) and Heckmans (1976) models as special cases. Contrary to the previous literature, the model can explain the life cycle hypothesis and the maximum in the consumption profile without appealing to the rupture of typical neoclassical assumptions and for any value of intertemporary elasticity of substitution. An estimation of the consumption demand for Spanish case shows that current earning is a significant and robust variable explaining the consumption pattern.