How Powerful is Demography? The Serendipity Theorem Revisited

David de la Croix (), Pierre Pestieau () and Gregory Ponthiere ()

No 2009040, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Introduced by Samuelson (1975), the Serendipity Theorem states that the competitive economy will converge towards the optimum steady-state provided the optimum population growth rate is imposed. This paper aims at exploring whether the Serendipity Theorem still holds in an economy with risky lifetime. We show that, under general conditions, including a perfect annuity market with actuarially fair return, imposing the optimum fertility rate and the optimum survival rate leads the competitive economy to the optimum steady-state. That Extended Serendipity Theorem is also shown to hold in economies where old adults work some fraction of the old-age, whatever the retirement age is fixed or chosen by the agents.

Keywords: Serendipity Theorem; fertility; mortality; overlapping generations; retirement (search for similar items in EconPapers)
JEL-codes: E13 E21 I18 J10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dge and nep-mac
Date: 2009-12-11
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Related works:
Journal Article: How powerful is demography? The Serendipity Theorem revisited (2012)
Working Paper: How powerful is demography ? The Serendipity Theorem revisited (2009)
Working Paper: How Powerful is Demography? The Serendipity Theorem Revisited (2009)
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