nep-age New Economics Papers
on Economics of Ageing
Issue of 2011‒04‒23
four papers chosen by
Claudia Villosio
LABORatorio R. Revelli

  1. Anchors Away: How Fiscal Policy Can Undermine "Good" Monetary Policy By Eric Leeper
  2. Unequal longevities and lifestyles transmission By Grégory Ponthière
  3. The Long-run Determinants of Fertility: One Century of Demographic Change 1900-1999 By Dierk Herzery; Holger Strulik; Sebastian Vollmer
  4. Does Formal Education for Older Workers Increase Earnings? – Analyzing Annual Data Stretching over 25 Years By Stenberg, Anders; de Luna, Xavier; Westerlund, Olle

  1. By: Eric Leeper
    Abstract: Slow moving demographics are aging populations around the world and pushing many countries into an extended period of heightened fiscal stress. In some countries, taxes alone cannot or likely will not fully fund projected pension and health care expenditures. If economic agents place sufficient probability on the economy hitting its ”fiscal limit” at some point in the future, after which further tax revenues are not forthcoming, it may no longer be possible for “good” monetary policy—behavior that obeys the Taylor principle—to control inflation or anchor inflation expectations. In the period leading up to the fiscal limit, the more aggressively that monetary policy leans against inflationary winds, the more expected inflation becomes unhinged from the inflation target. Problems confronting monetary policy are exacerbated when policy institutions leave fiscal objectives and targets unspecified and, therefore, fiscal expectations unanchored. In light of this theory, the paper contrasts monetary-fiscal policy frameworks in the United States and Chile.
    Date: 2010–05
  2. By: Grégory Ponthière (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris)
    Abstract: Whereas studies on the optimal taxation under endogenous longevity assume a fixed heterogeneity of lifestyles, this paper considers the optimal tax policy in an economy where unequal longevities are the unintended outcome of differences in lifestyles, and where lifestyles are transmitted across generations. For that purpose, we develop a three-period OLG model where the population, who ignores the negative impact of excessive work on longevity, is partitioned in two groups with different tastes for leisure, and follows an adaptation/imitation process à la Bisin and Verdier (2001). The optimal short-run and long-run Pigouvian taxes on wages are shown to differ, because the latter correct agents'myopia, but also internalize intergenerational externalities due to the socialization process.
    Keywords: longevity ; OLG model ; lifestyle ; socialization ; intergenerational externalities ; Pigouvian taxes
    Date: 2011–04–14
  3. By: Dierk Herzery; Holger Strulik; Sebastian Vollmer (Harvard School of Public Health)
    Abstract: We examine the long-run relationship between fertility, mortality, and income using panel cointegration techniques and the available data for the last century. Our main result is that mortality changes and growth of income per capita account for a major part of the fertility change characterizing the demographic transition. The fertility reduction triggered by falling mortality, however, is not enough to overcompensate the positive eect of falling mortality on population growth. This means that growth of income per capita is essential to explain the observed secular decline of population growth. These results are robust against alternative estimation methods, potential outliers, sample selection, dierent measures of mortality, and the sample period. In addition, our causality tests suggest that fertility is both endogenous and exogenous. In particular, we nd that an increase of fertility reduces growth of income per capita. Keywords: fertility; mortality; economic development; panel cointegration.
    Keywords: fertility, demographic change, mortality, income
    Date: 2010–10
  4. By: Stenberg, Anders (SOFI, Stockholm University); de Luna, Xavier (Department of Statistics, Umeå University); Westerlund, Olle (Department of Economics, Umeå University)
    Abstract: Governments in the US, Canada and Europe have expressed an ambition to stimulate education of older. In this paper, we analyze if there are effects on annual earnings of formal education for participants aged 42-55 at the time of enrolment in 1994-1995. The analysis explores longitudinal population register data stretching from 1982 to 2007. The method used is difference-in-differences propensity score matching based on a rich set of covariates, including indicators of health and labor market margi-nalization. Results differ from earlier studies, implying no significant average earnings effects for males, positive effects for females, although insufficient to cover total costs.
    Keywords: Adult education; Earnings; Government Expenditures; Human capital
    JEL: C21 H52 H75 I28
    Date: 2011–04–13

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