The “second dividend” and the demographic structure

Frederic Gonand and Pierre-André Jouvet

Journal of Environmental Economics and Management, 2015, vol. 72, issue C, 71-97

Abstract: The demographic structure of a country influences economic activity. The “second dividend” modifies growth. Accordingly, in general equilibrium, the second dividend and the demographic structure are interrelated. This paper aims at assessing empirically the “second dividend” in a dynamic, empirical and intertemporal setting that allows for measuring its impact on growth, its intergenerational redistributive effects, and its interaction with the demographic structure. The paper uses a general equilibrium model with overlapping generations, an energy module and a public finance module that distinguishes between non-ageing-related public spending and a pension regime. Policy scenarios compare the consequences of different scenarios of recycling a carbon tax through lower proportional income taxes rather than higher public lump-sum expenditures. They are computed for two countries with different demographics (France and Germany). Results suggest that the magnitude of the “second dividend” is significantly related with the demographic structure. The more concentrated the demographic structure on cohorts with higher income and saving rate, the stronger the effect on capital supply of the second dividend. The second dividend weighs on the welfare of relatively aged working cohorts. It fosters the wellbeing of young working cohorts and of future generations. The more concentrated the demographic structure on aged working cohorts, the higher the intergenerational redistributive effects of the second dividend.

Keywords: Energy transition; Intergenerational redistribution; Overlapping generations; Double dividend; General equilibrium (search for similar items in EconPapers)
JEL-codes: D58 D63 E62 L7 Q28 Q43 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: The "Second Dividend" and the Demographic Structure (2015)
Working Paper: The "Second Dividend" and the Demographic Structure (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:72:y:2015:i:c:p:71-97

DOI: 10.1016/j.jeem.2015.04.007

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