nep-dem New Economics Papers
on Demographic Economics
Issue of 2018‒03‒12
six papers chosen by
Héctor Pifarré i Arolas
Max-Planck-Institut für demografische Forschung

  1. Explaining the Decline in the U.S. Employment-to-Population Ratio: A Review of the Evidence By Katharine G. Abraham; Melissa S. Kearney
  2. The Effect of Population Aging on Economic Growth, the Labor Force and Productivity By Nicole Maestas; Kathleen J. Mullen; David Powell
  3. Dilution effects, population growth and economic growth under human capital accumulation and endogenous technological change By Bucci, Alberto; Eraydın, Levent; Müller, Moritz
  4. Uncertain Length of Life, Retirement Age, and Optimal Pension Design By Aronsson, Thomas; Blomquist, Sören
  5. The marriage gap: Optimal aging and death in partnerships By Schünemann, Johannes; Strulik, Holger; Trimborn, Timo
  6. The Effect of a Sibling's Gender on Earnings, Education and Family Formation By Peter, Noemi; Lundborg, Petter; Mikkelsen, Sara; Webbink, Dinand

  1. By: Katharine G. Abraham; Melissa S. Kearney
    Abstract: This paper first documents trends in employment rates and then reviews what is known about the various factors that have been proposed to explain the decline in the overall employment-to-population ratio between 1999 and 2016. Population aging has had a notable effect on the overall employment rate over this period, but within-age-group declines in employment among young and prime age adults have been at least as important. Our review of the evidence leads us to conclude that labor demand factors, in particular trade and the penetration of robots into the labor market, are the most important drivers of observed within-group declines in employment. Labor supply factors, most notably increased participation in disability insurance programs, have played a less important but not inconsequential role. Increases in the real value of the minimum wage and in the share of individuals with prison records also have contributed modestly to the decline in the aggregate employment rate. In addition to these factors, whose effects we roughly quantify, we also identify a set of potentially important factors about which the evidence is too preliminary to draw any clear conclusion. These include improvements in leisure technology, changing social norms, increased drug use, growth in occupational licensing, and the costs and challenges associated with child care. Our evidence-driven ranking of factors should be useful for guiding future discussions about the sources of decline in the aggregate employment-to-population ratio and consequently the likely efficacy of alternative policy approaches to increasing employment rates.
    JEL: J01 J21
    Date: 2018–02
  2. By: Nicole Maestas; Kathleen J. Mullen; David Powell
    Abstract: Population aging is widely assumed to have detrimental effects on economic growth yet there is little empirical evidence about the magnitude of its effects. This paper starts from the observation that many U.S. states have already experienced substantial growth in the size of their older population and much of this growth was predetermined by historical trends in fertility. We use predicted variation in the rate of population aging across U.S. states over the period 1980–2010 to estimate the economic impact of aging on state output per capita. We find that a 10% increase in the fraction of the population ages 60+ decreases the growth rate of GDP per capita by 5.5%. Two-thirds of the reduction is due to slower growth in the labor productivity of workers across the age distribution, while one-third arises from slower labor force growth. Our results imply annual GDP growth will slow by 1.2 percentage points this decade and 0.6 percentage points next decade due to population aging.
    Keywords: population aging, GDP growth, demographic transitions
    JEL: J11 J14 J23 J26 O47
    Date: 2016–08
  3. By: Bucci, Alberto; Eraydın, Levent; Müller, Moritz
    Abstract: This paper answers the following two questions: 1) In the data, can we find a dilution effect of population growth also on per-capita human capital investment? If yes, 2) how can we use this fact to explain theoretically the existence of a differential impact of population change on economic growth across countries? In the first part of the article we document empirically the considerable across-countries heterogeneity of a dilution effect of population growth also in regard to the process of per-capita human capital formation and observe that, at a country's level, population growth may be relevant (either positively or negatively) for economic growth depending on the specific way it affects the process of schooling-acquisition by agents. In the second part of the paper we use these results in order to build a multi-sector growth model which is capable of accounting (depending on the strength of the found dilution effect of population growth on per-capita human capital formation) for the non-monotonous correlation between demographic and economic growth rates in the long-run.
    Keywords: Human Capital Investment,Economic Growth,Population Growth,Dilution Effects,Research & Development
    JEL: J10 J24 O33 O41
    Date: 2018
  4. By: Aronsson, Thomas (Department of Economics, Umeå University); Blomquist, Sören (Department of Economics, Uppsala University)
    Abstract: In this paper, we consider how the hours of work and retirement age ought to respond to a change in the uncertainty of the length of life. In a first best framework, where a benevolent government exercises perfect control over the individuals’ labor supply and retirement-decisions, the results show that a decrease in the standard deviation of life-length leads to an increase in the optimal retirement age and a decrease in the hours of work per period spent working. This result is robust, and is also derived in models of decentralized decision-making where individuals decide on their own consumption, labor supply, and retirement age, and where the government attempts to affect their behavior and welfare through redistribution and pension policy.
    Keywords: uncertain lifetime; retirement; work hours pension policy
    JEL: D61 D80 H21 H55
    Date: 2018–03–02
  5. By: Schünemann, Johannes; Strulik, Holger; Trimborn, Timo
    Abstract: Married people live longer than singles but how much of the longevity gap is causal and what the particular mechanisms are is not fully understood. In this paper we propose a new approach, based on counterfactual computational experiments, in order to asses how much of the marriage gap can be explained by income pooling and public-goods sharing as well as collective bargaining of partners with different preferences and biology. For that purpose we integrate cooperative decision making of a couple into a biologically founded life-cycle model of health deficit accumulation and endogenous longevity. We calibrate the model with U.S. data and perform the counterfactual experiment of preventing the partnership. We elaborate four economic channels and find that, as singles, men live 8.5 months shorter and women 6 months longer. We conclude that about 25% of the marriage gain in longevity of men can be motivated by economic calculus while the marriage gain for women observed in the data is attributed to selection or other (non-standard economic) motives.
    Keywords: health,aging,longevity,marriage-gap,gender-specific preferences,unhealthy behavior
    JEL: D91 J17 J26 I12
    Date: 2018
  6. By: Peter, Noemi (Faculty of Economics and Business, University of Groningen); Lundborg, Petter (Department of Economics, Lund University); Mikkelsen, Sara (Department of Economics, Lund University); Webbink, Dinand (Erasmus School of Economics, Rotterdam)
    Abstract: We examine how the gender of a sibling affects earnings, education and family formation. Identification is complicated by parental preferences: if parents prefer certain sex compositions over others, children's gender affects not only the outcomes of other children but also the existence of potential additional children. We employ two empirical strategies that both address this problem. First, we look at a sample of dizygotic (i.e. non-identical) twins. Second, we use a large sample of singletons to estimate whether first-borns are affected by the gender of their second-born sibling. We find that a same-sex sibling increases men's earnings and family formation outcomes (marriage and number of children), as compared to an opposite-sex sibling. Women with a same-sex sibling also earn more and are somewhat more likely to form a family in the singleton sample. A large part of the positive effect on men's income can be explained by competition among brothers. Women on the other hand seem to benefit from sisters because of shared labor market networks. The effects on family formation might stem from differential parental treatment for men, and from competition between sisters for women.
    Keywords: sibling gender; sex composition; twins; income; schooling; fertility
    JEL: J00 J13 J16 J24
    Date: 2018–02–26

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