Demographics and savings: can we reconcile the evidence?

David Miles

No W97/06, IFS Working Papers from Institute for Fiscal Studies

Abstract:

It is well known that over the next few decades there will be significant changes in the demographic structures of nearly all developed countries; in the absence of massive immigration, or of catastrophic new fatal illnesses, by the middle of the next century the ratio of people of working age to those of retirement age will, in many countries, be only around one half the current level. Such dramatic demographic change could have a powerful impact upon saving behaviour in both the public and private sectors and upon asset prices and wages.

But estimates of how great the effects will be differ substantially depending on what kind of evidence is used. This paper first shows that projections based on a calibrated, overlapping generations model of the economy where agents display life-cycle savings behaviour are similar in broad shape to projections based on panel data estimates of the relation between demographics and saving. But the implications for the impact of demographic change of evidence from household data sets are strikingly different. This paper presents an explanation of this and assesses how far alternative pieces of evidence can be reconciled. The implications for asset prices, savings rates, capital accumulation and labour productivity over the next fifty years are explored.

Date: 1997-08-16
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.ifs.org.uk (application/pdf)

Related works:
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:ifs:ifsewp:97/06

Ordering information: This working paper can be ordered from
The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE
mailbox@ifs.org.uk

Access Statistics for this paper

More papers in IFS Working Papers from Institute for Fiscal Studies The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE. Contact information at EDIRC.
Bibliographic data for series maintained by Emma Hyman (emma_h@ifs.org.uk).