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Probabilistic Aging

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  • Dominik Grafenhofer
  • Christian Jaag
  • Christian Keuschnigg
  • Mirela Keuschnigg

Abstract

The paper develops an overlapping generations model with probabilistic aging of households. We define age as a set of personal attributes such as earnings potential, health and tastes that are characteristic of a person's position in the life-cycle. In assuming a limited number of different states of age, we separate the concepts of age and time since birth. Agents may retain their age characteristics for several periods before they move with a given probability to another state of age. Different generations that share the same age characteristics are aggregated analytically to a low number of age groups. The probabilistic aging model thus allows for a very parsimonious yet rather close approximation of demographic structure and life-cycle differences in earnings, wealth and consumption. Existing classes of overlapping generations models follow as special cases.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1680.

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Date of creation: 2006
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Handle: RePEc:ces:ceswps:_1680

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Keywords: overlapping generations; aging; demographics; life-cycle earnings;

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References

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Citations

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Cited by:
  1. Dominik Grafenhofer & Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2007. "Economic Aging and Demographic Change," University of St. Gallen Department of Economics working paper series 2007 2007-35, Department of Economics, University of St. Gallen.
  2. Heinrich Hock & David Weil, 2012. "On the dynamics of the age structure, dependency, and consumption," Journal of Population Economics, Springer, vol. 25(3), pages 1019-1043, July.
  3. Christian Jaag & Christian Keuschnigg & Mirela Keuschnigg, 2007. "Pension Reform, Retirement and Life-Cycle Unemployment," University of St. Gallen Department of Economics working paper series 2007 2007-43, Department of Economics, University of St. Gallen.
  4. Christian Jaag, 2005. "The Role of Endogenous Skill Choice in an Aging Economy," Public Economics 0505005, EconWPA.

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