Demography, Capital Flows and Unemployment

Luca Marchiori (), Olivier Pierrard and Henri Sneessens

No 6094, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper contributes to the already vast literature on demography-induced international capital flows by examining the role of labor market imperfections and institutions. We setup a two-country overlapping generations model with search unemployment, which we calibrate on EU15 and US data. Labor market imperfections are found to significantly increase the volume of capital flows, because of stronger employment adjustments in comparison with a competitive economy. We next exploit the model to investigate how demographic asymmetries may have contributed to unemployment and welfare changes in the recent past (1950-2010). We show that a policy reform in one country also has an impact on labor markets in other countries when capital is mobile.

Keywords: demographics; capital flows; overlapping generations; general equilibrium; unemployment (search for similar items in EconPapers)
JEL-codes: C68 D91 F21 J11 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2011-10
New Economics Papers: this item is included in nep-dem, nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Demography, capital flows and unemployment (2011)
Working Paper: Demography, capital flows and unemployment (2011)
Working Paper: Demography, capital flows and unemployment (2011)
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