nep-dem New Economics Papers
on Demographic Economics
Issue of 2022‒01‒10
seven papers chosen by
Héctor Pifarré i Arolas
Universitat Pompeu Fabra

  1. The Impact of Health and Education on Labor Force Participation in Aging Societies – Projections for the United States and Germany from a Dynamic Microsimulation By René Böheim; Thomas Horvath; Thomas Leoni; Martin Spielauer
  2. Population Aging and the US Labor Force Participation Rate By Daniel H. Cooper; Christopher L. Foote; Maria Jose Luengo-Prado; Giovanni P. Olivei
  3. Health Shocks of the Father and Longevity of the Children's Children By Dora Costa
  4. On the Child Quantity-Quality Trade-off: The Academic Performance of World Cup Babies By Dirk Bethmann; Jae Il Cho
  5. Tax reform, unemployment, and fertility By Minoru Watanabe
  6. Call for reforming our democracies: rejuvenating the median voter By Fischer, Justina AV
  7. Alternatives to paying child benefit to the rich. means testing or higher tax? By Patricia Apps; Ray Rees; Thor O. Thoresen; Trine E. Vattø

  1. By: René Böheim; Thomas Horvath; Thomas Leoni; Martin Spielauer
    Abstract: Using a highly stylized dynamic microsimulation model, we project the labor force of the United States up to the year 2060 and contrast these projections with projections for Germany to assess differential effects on outcomes The projections are consistent with the U S Census Bureau’s and Eurostat’s demographic projections. Our modeling approach allows to show and quantify how policy changes the future size of the labor force, which we assess with a series of what-if scenarios. Both the US and Germany are expected to undergo demographic aging, but their demographic fundamentals differ starkly. This has strong implications for their labor force developments. According to our microsimulation, the US labor force will, despite population aging, increase by 16.2 percent in the age groups 15 to 74 (corresponding to 25.2 million workers) between 2020 and 2060, while Germany will experience a decline by 10.7 percent (4.4 million workers). In these baseline projections, improvements in the education structure will add about two million persons to the US labor force and about half a million persons to the German labor force by 2060. In the what-if scenarios, we examine the implications of improvements in the educational structure of the population and of policies which address the health impediments for labor force participation. Of the educational scenarios that we evaluate, increasing the number of persons who achieve more than lower education has the strongest positive impact on labor force participation, relative to the number of additional years of schooling implied by the various scenarios. Shifting people from intermediate to higher education levels also increases labor force participation in higher age groups, however, this is partially offset by lock in effects at younger ages. Our projections highlight that improvements in the labor market integration of people with health limitations provide a particularly promising avenue to increase labor force participation rates and thus help to address the challenges posed by demographic aging. If the health gap in participation rates in the United States were similar to that currently observed in Sweden, the labor force in 2060 would be larger by about 14.9 million persons.
    JEL: C5 J11 J21
    Date: 2021–12
  2. By: Daniel H. Cooper; Christopher L. Foote; Maria Jose Luengo-Prado; Giovanni P. Olivei
    Abstract: The labor force participation rate dropped sharply at the beginning of the pandemic, and as of November 2021 it had recovered only about half of its lost ground. The failure of the participation rate to get closer to its level immediately before the pandemic has puzzled many analysts. In this note, we show that the current participation rate is much less puzzling if one compares it with participation in November 2017 (the last time the unemployment rate was at its current level of 4.2 percent), rather than February 2020 (immediately before the pandemic). Since November 2017, population aging has continued to exert a strong downward pull on the participation rate, so that participation is now close to what one would expect, given the current unemployment rate and the current age structure of the population. In the future, rising educational attainment will offset the negative effect of aging on participation to some degree. But a complete recovery of the participation rate to its February 2020 level may be difficult to achieve without substantial further declines in the unemployment rate.
    Keywords: labor force participation; labor force composition; demographic trends; labor market conditions; COVID-19
    JEL: E24 J11 J21
    Date: 2021–12–20
  3. By: Dora Costa
    Abstract: Whether and how a paternal health shock cascades across multiple generations to affect descendant health is understudied even though a link between ancestral living conditions and descendant health may constitute an important source of differences in the stock of health capital across families and thus across ethnic, racial and social groups. I study how a paternal health shock affects grandchildren's longevity in a unique setting where the ancestral stressor is the grandfather's ex-POW status in the US Civil War (1861-5) and the children are born after the war. Ancestral stress is associated with longevity after age 45 of male-line grandsons but not of granddaughters or female-line grandchildren. I rule out transmission through socioeconomic channels and direct cultural transmission from grandfather to grandson. An epigenetic explanation is consistent with observed male-line transmission at epigenetically sensitive ancestral ages and mediation by own late gestational conditions. Consistent with epigenetic reprogramming depending on the in-utero environment, the association between the veteran's ex-POW status and that of his male-line descendants declines across generations.
    JEL: I14 I19 N31 N32
    Date: 2021–12
  4. By: Dirk Bethmann (Korea University; Department of Economics; Anam-dong, Sungbuk-gu; Seoul 02841); Jae Il Cho (Vanderbilt University; Department of Economics; 010-back Calhoun Hall, Nashville, TN, 37240, United States)
    Abstract: In June 2002, South Korea and Japan jointly hosted the 17th FIFA World Cup. Stunning match results made Korean people gather in large crowds to cheer for their national team. In the subsequent spring, Korea experienced an increase in the fertility rate. Through a difference-in-differences design, we show that children born approximately 10 months after the World Cup tend to underperform in school.
    Keywords: FIFA World Cup, quantity-quality trade-off, difference-in-differences, academic performance
    JEL: I20 J13 R23
    Date: 2022
  5. By: Minoru Watanabe (Research Fellow, Graduate School of Economics, Kobe University/Hokusei Gakuen University)
    Abstract: This breif article describes the development of a simple overlapping generations model with unemployment and endogenous fertility to analyze the impact of increasing capital income tax. We find that higher capital income tax promotes employment and fertility.
    Date: 2021–12
  6. By: Fischer, Justina AV
    Abstract: Aging populations threaten the future of Western societies and their democratic systems. An aging electorate leads to policies dominated by fear (of death), hindering important social reforms. This article describes this phenomenon from a political philosophy and behavioral psychology perspective and proposes a solution based on a new interpretation of social contract theory. Specifically, I propose the down-weighing of ballots of older voters by their remaining lifespans. I conclude with a discussion of the justice and the fairness of my proposal from the perspective of political philosophy and public economics.
    Keywords: median voter; social contract; aging population; voting
    JEL: H0 I3 J10 Z1
    Date: 2021–12–26
  7. By: Patricia Apps; Ray Rees; Thor O. Thoresen; Trine E. Vattø (Statistics Norway)
    Abstract: The American Rescue Plan Act of 2021 implies that the US is effectively moving towards a general child benefit. However, the amount paid out is dependent on income, similar to schemes in several other countries. In the present paper, we argue that instead of suppressing the labour supply of middle income parents through withdrawing the transfer as a function of income, one should consider the obvious alternative of financing a generous universal child benefit by changing the overall income tax system. Implications of means testing relative to a tax financed universal alternative are discussed analytically in a piece-wise linear schedule. Moreover, we provide empirical illustrations of effects of child benefit design by combining information from behavioral and non-behavioral microsimulation models, representing the universe of Norwegian households. Results from both the analytical discussion and the simulations question the case for letting the child benefit be means tested.
    Keywords: Child benefit design; Labour supply; Income distribution; piecewise linear tax schedule
    JEL: C25 J13 J22
    Date: 2021–11

This nep-dem issue is ©2022 by Héctor Pifarré i Arolas. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.