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Probabilistic Aging

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Author Info
Dominik Grafenhofer ()
Christian Jaag ()
Christian Keuschnigg ()
Mirela Keuschnigg ()

Additional information is available for the following registered author(s):

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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Publisher Info
Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 1680.

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

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Related research
Keywords: overlapping generations aging demographics life-cycle earnings

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Find related papers by JEL classification:
D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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References listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Heinrich Hock & David N. Weil, 2006. "The Dynamics of the Age Structure, Dependency, and Consumption," NBER Working Papers 12140, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Kilponen , Juha & Kinnunen , Helvi & Ripatti , Antti, 2006. "Population ageing in a small open economy – some policy experiments with a tractable general equilibrium model," Research Discussion Papers 28/2006, Bank of Finland. [Downloadable!]
  3. Christian Jaag, 2005. "The Role of Endogenous Skill Choice in an Aging Economy," Public Economics 0505005, EconWPA. [Downloadable!]
  4. 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. [Downloadable!]
    Other versions:
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