Intergenerational earnings mobility and demographic dynamics: Welfare analysis of an aging Japan

Akira Okamoto

Economic Analysis and Policy, 2022, vol. 74, issue C, 76-104

Abstract: This paper simulates the effects of intergenerational earnings mobility on individual welfare and future demography in an aging and depopulating Japan. A simulation analysis finds that increased intergenerational mobility across income classes promotes economic growth, and from a long-term perspective, a higher mobility potentially achieves Pareto improvements. In the long run, however, it will hinder economic growth. This is because increased mobility increases the population share of individuals with a higher labor productivity, enhancing economic growth in the initial stage, but because of their lower fertility, an increase in their population ratio negatively effects the total population over time.

Keywords: Intergenerational earnings mobility; Depopulating and aging societies; Demographic dynamics; Pareto improvements; Welfare analysis (search for similar items in EconPapers)
JEL-codes: C68 H30 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:74:y:2022:i:c:p:76-104

DOI: 10.1016/j.eap.2022.01.006

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