EconPapers    
Economics at your fingertips  
 

Demographic Change, Human Capital and Welfare

Alexander Ludwig (), Thomas Schelkle () and Edgar Vogel

Review of Economic Dynamics, 2012, vol. 15, issue 1, 94-107

Abstract: Projected demographic changes in the U.S. will reduce the share of the working-age population. Analyses based on standard OLG models predict that these changes will increase the capital-labor ratio. Hence, rates of return to capital decrease and wages increase, which has adverse welfare consequences for current cohorts who will be retired when the rate of return is low. This paper argues that adding endogenous human capital accumulation to the standard model dampens these forces. We find that this adjustment channel is quantitatively important. The standard model with exogenous human capital predicts welfare losses up to 12.5% (5.6%) of lifetime consumption, when contribution (replacement) rates to the pension system are kept constant. These numbers reduce to approximately 8.7% (4.4%) when human capital can endogenously adjust. (Copyright: Elsevier)

Keywords: Population aging; Human capital; Rate of return; Distribution of welfare (search for similar items in EconPapers)
JEL-codes: C68 E17 E25 J11 J24 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (104) Track citations by RSS feed

Downloads: (external link)
http://dx.doi.org/10.1016/j.red.2011.07.001
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See http://www.sciencedirect.com/ for details.

Related works:
Software Item: Code and data files for "Demographic Change, Human Capital and Welfare" (2011) Downloads
Working Paper: Online Appendix to "Demographic Change, Human Capital and Welfare" (2011) Downloads
Working Paper: Demographic Change, Human Capital and Welfare (2010) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:issued:08-168

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2011.07.001

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

 
Page updated 2021-08-26
Handle: RePEc:red:issued:08-168