Over-aging: Are present human populations too old?

Robert Stelter

No 137, Thuenen-Series of Applied Economic Theory from University of Rostock, Institute of Economics

Abstract: This paper investigates the problem of an \optimum population" concerning age structures in a 3-period OLG-model with endogenous fertility and longevity. The first-best solution for a number-dampened total social welfare function, including Millian and Benthamite utilitarianism as two extreme cases, identifies the optimal age structure, generally failed in the laissez-faire economy. Individuals over-invest in health expenditures and choose a non-optimal number of offspring. A calibration exercise for 80 countries emphasizes that mean ages in the optimal solution with the highest feasible individual utility exceed the observed in all countries, especially due to a very low first-best number of children. Introducing a preference for the population stock in the social welfare function increases fertility, but reduces individual utility, in the first-best solution. Optimal mean age shrinks and an over-aging of the laissez-faire economy becomes more likely. To decentralize first-best solutions health expenditures are taxed, whereas children are either taxed or subsided.

Keywords: endogenous fertility; adult mortality; optimal age structure; over-aging; optimal taxation (search for similar items in EconPapers)
JEL-codes: H20 I10 J18 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-age, nep-dge and nep-upt
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https://www.econstor.eu/bitstream/10419/102657/1/797947604.pdf (application/pdf)

Related works:
Working Paper: Over-aging - Are present human populations too old? (2015)
Working Paper: Over-aging - Are present human populations too old? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:roswps:137

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