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Labor supply of elderly people, fertility, and economic development

Makoto Hirazawa and Akira Yakita ()

Journal of Macroeconomics, 2017, vol. 51, issue C, 75-96

Abstract: Increases in life expectancy and the fertility rate have been observed as per-capita income increases in economically developed countries with high per-capita income. We explain these observations using a synthetic economic model with endogenous lifetime, retirement, and human capital accumulation. In contrast to the result obtained by assuming an institutionally fixed and compulsory retirement, a longer life expectancy attributable to rises in per-capita income can induce elderly people to leave the labor market later, thereby enabling them to increase consumption of goods as well as “children” when young. Consequently, higher per-capita income can be associated with higher fertility.

Keywords: Fertility; Life expectancy; Labor supply of elderly people; Human capital (search for similar items in EconPapers)
JEL-codes: D91 J13 J14 J26 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:jmacro:v:51:y:2017:i:c:p:75-96