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Income Growth in the 21st century: forecasts with an overlapping generations model

David de la Croix (), Frédéric Docquier () and Liegeois Philippe
Additional contact information
Liegeois Philippe: CEPS, INSTEAD, Luxemburg

No 2007029, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: We forecast income growth over the periode 2000-2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible t changes in the environment, we use a quantitative theoretical approach which consists in calibrating and simulating a general equilibrium model. Compared to existing studies to link taxes and public expenditures to demographic changes, and take into account the interaction between education and work experience. Forecasts show that growth will be weaker over the period 2010-2040. The gap between the US and the two other countries is increasing over time. France will catch-up and overtake Canada in 2020. Investigating alternative policy scenarios, we show that increasing the effective retirement age to 63 would be most profitable for France, reducing its gap with US by one third. A decrease in social security benefits would slightly stimulate growth but would have no real impact on the gap between the countries.

Keywords: Aging; Forecast; Computable General Equilibrium; Education; Experience (search for similar items in EconPapers)
JEL-codes: D58 E6 H55 J11 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-cmp, nep-dge, nep-for and nep-mac
Date: 2007-09-01
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Journal Article: Income growth in the 21st century: Forecasts with an overlapping generations model (2007) Downloads
Working Paper: Income growth in the 21st century: Forecasts with an overlapping generations model (2007) Downloads
Working Paper: Income growth in the 21st century: Forecasts with an overlapping generations model (2007) Downloads
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