nep-dem New Economics Papers
on Demographic Economics
Issue of 2020‒04‒20
eight papers chosen by
Héctor Pifarré i Arolas
Universitat Pompeu Fabra

  1. Impact of Family Planning Policy on Gender Inequality: Evidence from China By Yining Geng
  2. Rising longevity, increasing the retirement age, and the consequences for knowledge-based long-run growth By Kuhn, Michael; Prettner, Klaus
  3. The Murder-Suicide of the Rentier: Population Aging and the Risk Premium By Joseph Kopecky; Alan M. Taylor
  4. Social Insurance and Public Assistance in the Twentieth-Century United States: 2019 Presidential Address for the Economic History Association By Price V. Fishback
  5. Discrimination, Migration, and Economic Outcomes: Evidence from World War I By Andreas Ferrara; Price V. Fishback
  6. The Brazilian Bombshell? The Long-Term Impact of the 1918 Influenza Pandemic the South American Way By Amanda Guimbeau; Nidhiya Menon; Aldo Musacchio
  7. The Macroeconomics of Epidemics By Martin S. Eichenbaum; Sergio Rebelo; Mathias Trabandt
  8. The Unprecedented Stock Market Impact of COVID-19 By Scott R. Baker; Nicholas Bloom; Steven J. Davis; Kyle J. Kost; Marco C. Sammon; Tasaneeya Viratyosin

  1. By: Yining Geng
    Abstract: The investments parents make in their children can be gender specific. I study the impact of family planning policies on gender-specific outcomes. Empirically, this paper uses China’s Family Planning Policy (FPP), enacted in 1971, to understand how a reduction in the number of children in a family can generate gender-specific outcomes. I mainly use the diff-in-diff strategy to compare the educational outcomes of boys and of girls born before and after the FPP was implemented. I find that while post-FPP-born children generally complete higher levels of education, this effect is particularly stronger for girls. This finding is robust to (1) using the diff-in-diff-in-diff strategy by incorporating another dimension of variation: different fertility constraints imposed by the FPP on the ethnic majority Han than those imposed on ethnic minorities; and (2) using a different measure of educational outcomes: the probability of pursuing an education beyond the compulsory education period. In addition, I document that the FPP also has an impact on changing women’s preference for their child’s gender. Post-FPP-born women show a more pronounced change in gender attitudes and exhibit less son preference than their male counterparts.
    Keywords: Family Planning Policy; Fertility; Education; Gender Inequality.
    Date: 2020–03
  2. By: Kuhn, Michael; Prettner, Klaus
    Abstract: We assess the long-run growth effects of rising longevity and increasing the retirement age when growth is driven by purposeful research and development. In contrast to economies in which growth depends on learning-by-doing spillovers, raising the retirement age fosters economic growth. How economic growth changes in response to rising life expectancy depends on the retirement response. Employing numerical analysis we find that the requirement for experiencing a growth stimulus from rising longevity is fulfilled for the United States, nearly met for the average OECD economy, but missed by the EU and by Japan.
    Keywords: Demographic Change,Rising Life Expectancy,Pension Reforms,Long-Run Economic Growth,R&D,Innovation
    JEL: J10 J26 O30 O41
    Date: 2020
  3. By: Joseph Kopecky; Alan M. Taylor
    Abstract: Population aging has been linked to global declines in interest rates. A similar trend shows that equity risk premia are on the rise. An existing literature can explain part of the decline in the trend in safe rates using demographics, but has no mechanism to speak to trends in relative asset prices. We calibrate a heterogeneous agent life-cycle model with equity markets, showing that this demographic channel can simultaneously account for both the majority of a downward trend in the risk free rate, while also increasing premium attached to risky assets. This is because the life cycle savings dynamics that have been well documented exert less pressure on risky assets as older households shift away from risk. Under reasonable calibrations we find declines in the safe rate that are considerably larger than most existing estimates between the years 1990 and 2017. We are also able to account for most of the rise in the equity risk premium. Projecting forward to 2050 we show that persistent demographic forces will continue push the risk free rate further into negative territory, while the equity risk premium remains elevated.
    JEL: E21 E43 G11 J11
    Date: 2020–04
  4. By: Price V. Fishback
    Abstract: The growth of American governments in the twentieth century included large increases in funds for social insurance and public assistance. Social insurance has increased far more than public assistance, so “rise in the social insurance state” is a far better description of the century than “rise in the welfare state.” The United States has increased total spending in these areas as much or more as have European countries, but the U.S. spending has relied less heavily on government programs. The U.S. really has 51 different social welfare systems, and I develop estimates of these benefits across time and place and compare them to the poverty line, manufacturing earnings and benefits, state per capita incomes in the US, as well as GDP per capita in countries throughout the world.
    JEL: H53 H75 N32
    Date: 2020–04
  5. By: Andreas Ferrara; Price V. Fishback
    Abstract: Are the costs of discrimination mainly borne by the targeted group or by society? This paper examines both individual and aggregate costs of ethnic discrimination. Studying Germans living in the U.S. during World War I, an event that abruptly downgraded their previously high social standing, we propose a novel measure of local anti-German sentiment based on war casualties. We show that Germans disproportionally fled counties with high casualty rates and that those counties saw more anti-German slurs reported in newspapers. German movers had worse occupational outcomes after the war but also the discriminating communities paid a substantial cost. Counties with larger outflows of Germans, who pre-war tended to be well-trained manufacturing workers, saw a drop in average annual manufacturing wages of 1-7% which persisted until 1940. Thus, for discriminating communities, a few years of intense anti-German sentiment were reflected in worse economic outcomes that lasted for more than a decade.
    JEL: J15 J61 J71 N32 N42
    Date: 2020–04
  6. By: Amanda Guimbeau; Nidhiya Menon; Aldo Musacchio
    Abstract: We analyze the repercussions of the 1918 Influenza Pandemic on demographic measures, human capital formation, and productivity markers in the state of Sao Paulo, Brazil's financial center and the most populous city in South America today. Leveraging temporal and spatial variation in district-level estimates of influenza-related deaths for the period 1917-1920 combined with a unique database on socio-economic, health and productivity outcomes constructed from historical and contemporary documents for all districts in Sao Paulo, we find that the 1918 Influenza pandemic had significant negative impacts on infant mortality and sex ratios at birth in 1920 (the short-run). We find robust evidence of persistent effects on health, educational attainment and productivity more than twenty years later. Our study highlights the importance of documenting the legacy of historical shocks in understanding the development trajectories of countries over time.
    JEL: I15 J10 N36 O12
    Date: 2020–04
  7. By: Martin S. Eichenbaum; Sergio Rebelo; Mathias Trabandt
    Abstract: We extend the canonical epidemiology model to study the interaction between economic decisions and epidemics. Our model implies that people’s decision to cut back on consumption and work reduces the severity of the epidemic, as measured by total deaths. These decisions exacerbate the size of the recession caused by the epidemic. The competitive equilibrium is not socially optimal because infected people do not fully internalize the effect of their economic decisions on the spread of the virus. In our benchmark scenario, the optimal containment policy increases the severity of the recession but saves roughly half a million lives in the U.S.
    JEL: E1 H0 I1
    Date: 2020–03
  8. By: Scott R. Baker; Nicholas Bloom; Steven J. Davis; Kyle J. Kost; Marco C. Sammon; Tasaneeya Viratyosin
    Abstract: No previous infectious disease outbreak, including the Spanish Flu, has impacted the stock market as powerfully as the COVID-19 pandemic. We use text-based methods to develop this point with respect to large daily stock market moves back to 1900 and with respect to overall stock market volatility back to 1985. We also argue that policy responses to the COVID-19 pandemic provide the most compelling explanation for its unprecedented stock market imact.
    JEL: E44 G12
    Date: 2020–04

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