Chapter

Old Europe Ages

Axel Börsch-Supan and Alexander Ludwig

in Demography and the Economy

Published by University of Chicago Press

Published in print January 2011 | ISBN: 9780226754727
Published online February 2013 | e-ISBN: 9780226754758 | DOI: http://dx.doi.org/10.7208/chicago/9780226754758.003.0006
Old Europe Ages

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This chapter looks at the macroeconomic implications of population aging in Europe. Europe was considered for this study because fertility rates are lower in Europe than in America, mortality rates are slightly lower, and therefore the European age structure is similar to the future American demographic composition. This chapter examines a number of possible reforms and the likely behavioral responses to them. Examples of behavioral responses are that married men may work less if child care is provided to encourage the labor force participation of mothers. Another example is that the demand for part-time work may increase as mandatory retirement ages are raised. The chapter looks at the impact of labor and pension reforms using a multicountry overlapping generations' general equilibrium model. The chapter concludes that the reforms, if correctly designed and coordinated, can have a very significant impact on future living standards in these three European countries.

Keywords: old Europe ages; reforms; indirect behavioral effects; direct quantity; economic growth; living standards; labor markets; population aging; per capita consumption; secular growth path; European continent

Chapter.  11350 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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