Baby-Boom Aging and Average Living Standards

William Scarth and Marick Souare

Quantitative Studies in Economics and Population Research Reports from McMaster University

Abstract: A calibrated overlapping generations model is used to investigate the effect on living standards of the aging baby boom. The relative scarcity of labor when baby boomers are old raises the wage-rental ratio by an amount that is sufficient to ensure that the post baby-boom generation can enjoy a modest increase in living standards - despite facing higher taxes. Nevertheless, the baby-boom cohort itself suffers a drop in consumption, and when the two generations are considered as a group, overall living standards fall by a modest amount. These results are robust to several changes in specification: the existence of liquidity constraints, alternative assumptions regarding individuals' expectations concerning future interest rates, and different fiscal policies concerning the tax treatment of private saving for retirement. Policy initiatives that bring significant hardship today to avoid a future "crisis" are not supported by the standard overlapping generations model.

Keywords: over-lapping generations model; living standards; baby-boom; aging (search for similar items in EconPapers)
JEL-codes: E17 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2002-02
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://socserv.mcmaster.ca/qsep/p/qsep368.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://socserv.mcmaster.ca/qsep/p/qsep368.pdf [302 Moved Temporarily]--> https://socialsciences.mcmaster.ca/qsep/p/qsep368.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:mcm:qseprr:368

Access Statistics for this paper

More papers in Quantitative Studies in Economics and Population Research Reports from McMaster University Contact information at EDIRC.
Bibliographic data for series maintained by ().