Over-aging - Are present human populations too old?

Robert Stelter

No 2015009, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper investigates the problem of an "optimum population" concerning age structures in a 3-period OLG-model with endogenous fertility and longevity. The first-best solution for a number-dampened total social welfare function, including Millian and Benthamite utilitarianism as two extreme cases, identifies the optimal age structure, generally failed in laissez-faire economies. As individuals don't internalize effects of longevity on life-cycle income, they overinvest in health. Additionally, they choose a non-optimal number of offspring. A calibration exercise for 80 countries emphasizes that an over-aging of populations crucially depends on social preferences and observed age structures. Interestingly, we find that in contrast to taxes on health expenditures, taxes or subsidies on children to decentralize the first-best solution are sensitive to social preferences.

Keywords: endogenous fertility; adult mortality; optimal age structure; over-aging; optimal taxation (search for similar items in EconPapers)
JEL-codes: H20 I10 J18 (search for similar items in EconPapers)
Pages: 45
Date: 2015-05-03
New Economics Papers: this item is included in nep-age, nep-dge and nep-evo
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http://sites.uclouvain.be/econ/DP/IRES/2015009.pdf (application/pdf)

Related works:
Working Paper: Over-aging: Are present human populations too old? (2014)
Working Paper: Over-aging - Are present human populations too old? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2015009

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