nep-dem New Economics Papers
on Demographic Economics
Issue of 2019‒10‒14
five papers chosen by
Héctor Pifarré i Arolas
Universitat Pompeu Fabra

  1. Marriage, Children, and Labor Supply: Beliefs and Outcomes By Yifan Gong; Ralph Stinebrickner; Todd R. Stinebrickner
  2. Household Labor Search, Spousal Insurance, and Health Care Reform By Hanming Fang; Andrew J. Shephard
  3. Wealth Taxation and Life Expectancy By Antonio Bellofatto
  4. Population aging and structural transformation By Cravino, Javier; Levchenko, Andrei A.; Rojas, Marco
  5. The One-Child Policy and Chinese Saving Behavior By Zhongchen Song; Tom Coupé; W. Robert Reed

  1. By: Yifan Gong; Ralph Stinebrickner; Todd R. Stinebrickner
    Abstract: While a large literature is interested in the relationship between family and labor supply outcomes, little is known about the expectations of these objects at earlier stages. We examine these expectations, taking advantage of unique data from the Berea Panel Study. In addition to characterizing expectations, starting during college, the data details outcomes for ten years after graduation. On average, both male and female college students are well-informed about the future gender gap in labor supply. Gender differences in beliefs about this future gap are primarily explained by gender differences in beliefs about how future family outcomes are related to future labor supply. Methodological contributions come from an approach for addressing measurement error in survey questions and the recognition that expectations data, along with longitudinal data, can potentially help address endogeneity issues arising in the estimation of the causal effect of family on labor supply.
    JEL: J12 J13 J2
    Date: 2019–10
  2. By: Hanming Fang; Andrew J. Shephard
    Abstract: Health insurance in the United States for the working age population has traditionally been provided in the form of employer-sponsored health insurance (ESHI). If employers offered ESHI to their employees, they also typically extended coverage to their spouse and dependents. Provisions in the Affordable Care Act (ACA) significantly alter the incentive for firms to offer insurance to the spouses of employees. We evaluate the long-run impact of ACA on firms’ insurance offerings and on household outcomes by developing and estimating an equilibrium job search model in which multiple household members are searching for jobs. The distribution of job offers is determined endogenously, with compensation packages consisting of a wage and menu of insurance offerings (premiums and coverage) that workers select from. Using our estimated model we find that households’ valuation of employer-sponsored spousal health insurance is significantly reduced under ACA, and with an “employee-only” health insurance contract emerging among low productivity firms. We relate these outcomes to the specific provisions in the ACA.
    JEL: G22 I11 I13 J32
    Date: 2019–10
  3. By: Antonio Bellofatto (University of Queensland)
    Abstract: I study the optimal taxation of wealth in a dynastic economy with heterogeneous mortality risk, and various sources of wealth accumulation (including savings and bequests). Working individuals are indexed by skills which are private information. Skills not only determine earning abilities but also correlate with survival probability, so that more productive agents on average live longer. My analysis points to the longevity gradient as a crucial determinant for optimal wealth taxation, both from a theoretical and from a quantitative angle. In particular, due to longevity variations, savings should be marginally taxed in expectation, while bequests received early in life should be marginally subsidized on average. When calibrated to U.S. data, such forces are commensurate with the actual levels of wealth taxation in a sample of developed countries.
    Date: 2019
  4. By: Cravino, Javier; Levchenko, Andrei A.; Rojas, Marco
    Abstract: We propose and quantify a novel mechanism behind the structural transformation process: older individuals devote a larger share of their expenditures to services, so the relative size of the service sector grows as the population ages. We document that for a large sample of countries, increases in population age are accompanied by the rise in the relative size of the service sector. We use household-level data from the US Consumer Expenditure Survey to show that the fraction of expenditures devoted to services increases with household age. We use a shift-share decomposition and a quantitative model to show that changes in the US population age distribution accounted for about a fifth of the increase in the share of services in consumption expenditures observed between 1982 and 2016. In our quantitative model, population aging plays a much larger role than changes in real income in accounting for the structural change observed in the US during this period.
    Date: 2019–09
  5. By: Zhongchen Song; Tom Coupé (University of Canterbury); W. Robert Reed (University of Canterbury)
    Abstract: Researchers have long puzzled over China’s high saving rate. Some have hypothesized that the explanation lies with China’s One-Child Policy (OCP). According to this hypothesis, faced with fewer children to support them in their old age, Chinese parents increased their saving to finance retirement. Previous research relied on empirical studies of the relationship between children and saving behavior. However, all of these studies based their analysis on data after the OCP was implemented. Their implicit counterfactual for China without an OCP was households with multiple children living in an OCP environment. In contrast, we compare Chinese people with people from regions that do not have restrictive population policies (Taiwan, Hong Kong, Singapore, Malaysia, Japan, and South Korea). These regions share many cultural and demographic characteristics with China that suggest they can be used as a counterfactual for China. This approach also enables us to employ a Blinder-Oaxaca decomposition procedure to identify the different channels by which children could affect savings. Our main finding is that there is little difference in the saving behavior of Chinese people with their regional counterfactuals. This is evidence against the hypothesis that the OCP was a major contributor to China’s high saving rate. It also suggests that the recent relaxation of the OCP cannot be counted upon to boost Chinese consumption.
    Keywords: China, One-Child Policy, Saving rate, Demographics, Blinder-Oaxaca decomposition
    JEL: D14 E21 J13 J18 O10
    Date: 2019–10–01

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