Complications Of The Modigliani's Life-Cycle Theory

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The General Theory was formally introduced in the 1936 by Keynes and This theory Introduce the relationship between consumption and income, it was the first discussed about saving motives (Fisher et al. 2010). The Modigliani’s Life-Cycle Theory was formally introduced by Modigliani e Brumberg (1954) (Browning & Lusardi, 1996). The life-cycle theory incorporate socioeconomic variables an uncertain future and relationship between saving and the age-structure of the population. According to this perspective a young individual has less wealthy and top wealthy is reached just before individual retire. According to this perspective people are distributed by the population pyramid, which over time the population growth and there are more number of…show more content…
(Browning & Lusardi, 1996). The relationship between saving and the age-structure of the population is still currently considered as a good indicator for analyst behavior (Deaton, 2005). The Permanent Income Hypothesis was formally introduced by Friedman (1957) and investigated high income might save more and the individual consumer’s at a level consistent with their estimated long term average income (Shefrin & Thaler, 1988). This theory is similar to theory Life-Cycle. (Browning & Lusardi, 1996). In the 1960s Theodore Schultz and Gary Becker emerged Human Capital Theory (HCT) that defend investments in knowledge because the key to the economic growth is where people interact with knowledge whatever increases the productivity and earnings. First publication of the book Human Capital by Gary Becker in 1964 and has impact in economics, education and sociology literature (Tan, 2014). Education is formalized at primary, secondary, and higher levels by Cohn & Geske (1990), informal education at home and at work by Schultz (1981), training and education by Mincer (1974) (Sweetland,
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