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How powerful is demography? The Serendipity Theorem revisited

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  • de la CROIX, David
  • PESTIEAU, Pierre
  • PONTHIERE, Grégory

Abstract

Introduced by Samuelson (1975), the Serendipity Theorem states that the competitive economy will converge towards the optimum steady-state provided the optimum population growth rate is imposed. This paper aims at exploring whether the Serendipity Theorem still holds in an economy with risky lifetime. We show that, under general conditions, including a perfect annuity market with actuarially fair return, imposing the optimum fertility rate and the optimum survival rate leads the competitive economy to the optimum steady-state. That Extended Serendipity Theorem is also shown to hold in economies where old adults work some fraction of the old-age, whatever the retirement age is fixed or chosen by the agents

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2420.

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Handle: RePEc:cor:louvrp:-2420

Note: In : Journal of Population Economics, 25(3), 899-922, 2012
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References

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  1. Pierre-André Jouvet & Pierre Pestieau & Gregory Ponthiere, 2010. "Longevity and environmental quality in an OLG model," Journal of Economics, Springer, Springer, vol. 100(3), pages 191-216, July.
  2. de la Croix, David & Mahieu, Géraldine & Rillaers, Alexandra, 2000. "How should retirement policy adjust to the baby bust ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Gemma Abio Roig, 2003. "Interiority of the Optimal Population Growth Rate with Endogenous Fertility," Working Papers in Economics 96, Universitat de Barcelona. Espai de Recerca en Economia.
  4. DE LA CROIX, David & PONTHIÈRE, Grégory, 2008. "On the Golden Rule of capital accumulation under endogenous longevity," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2008049, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. DE LA CROIX, David & MAHIEU, Géraldine & RILLAERS, Alexandra, . "How should the allocation of resources adjust to the baby bust?," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1741, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Klaus Jaeger & Wolfgang Kuhle, 2009. "The optimum growth rate for population reconsidered," Journal of Population Economics, Springer, Springer, vol. 22(1), pages 23-41, January.
  7. Michel, Philippe & Pestieau, P, 1993. "Population Growth and Optimality: When Does Serendipity Hold?," Journal of Population Economics, Springer, Springer, vol. 6(4), pages 353-62, November.
  8. Deardorff, Alan V, 1976. "The Optimum Growth Rate for Population: Comment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 510-15, June.
  9. Gregory Ponthiere, 2009. "Rectangularization And The Rise In Limit-Longevity In A Simple Overlapping Generations Model," Manchester School, University of Manchester, vol. 77(1), pages 17-46, 01.
  10. Omar Licandro & David de la Croix, 2009. "The Child is Father of the Man: Implications for the Demographic Transition," UFAE and IAE Working Papers, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) 765.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  11. Oded Galor & Omer Moav, 2004. "Natural Selection and the Evolution of Life Expectancy," GE, Growth, Math methods, EconWPA 0409004, EconWPA.
  12. G. ABIO & Géraldine MAHIEU & C. Patxot, 2002. "On the Optimality of PAYG Pension Systems in an Endogenous Fertility Setting," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2002006, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  13. de la Croix,David & Michel,Philippe, 2002. "A Theory of Economic Growth," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521806428.
  14. Samuelson, Paul A, 1975. "The Optimum Growth Rate for Population," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 531-38, October.
  15. Matthias Doepke, 2001. "Accounting for Fertility Decline During the Transition to Growth," UCLA Economics Working Papers, UCLA Department of Economics 804, UCLA Department of Economics.
  16. Hu, Sheng Cheng, 1979. "Social Security, the Supply of Labor, and Capital Accumulation," American Economic Review, American Economic Association, American Economic Association, vol. 69(3), pages 274-83, June.
  17. Tomas J. Philipson & Gary S. Becker, 1998. "Old-Age Longevity and Mortality-Contingent Claims," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 106(3), pages 551-573, June.
  18. Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 26(2), pages 187-204, February.
  19. Jeffrey R. Brown, 2007. "Rational and Behavioral Perspectives on the Role of Annuities in Retirement Planning," NBER Working Papers 13537, National Bureau of Economic Research, Inc.
  20. repec:ebl:ecbull:v:10:y:2003:i:4:p:1-7 is not listed on IDEAS
  21. Shankha Chakraborty, 2002. "Endogenous Lifetime and Economic Growth," University of Oregon Economics Department Working Papers, University of Oregon Economics Department 2002-03, University of Oregon Economics Department, revised 26 Jan 2002.
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Cited by:
  1. repec:hal:wpaper:halshs-00676492 is not listed on IDEAS
  2. repec:hal:psewpa:halshs-00746913 is not listed on IDEAS
  3. Thomas Renstrom & Luca Spataro, 2014. "Population growth and human capital: a welfarist approach," Public Finance Research Papers, Istituto di Economia e Finanza, DIGEF, Sapienza University of Rome 3, Istituto di Economia e Finanza, DIGEF, Sapienza University of Rome.
  4. PESTIEAU, Pierre & PONTHIERE, Grégory, 2011. "Optimal fertility along the lifecycle," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2011033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. PESTIEAU, Pierre & PONTHIERE, Grégory, . "The public economics of increasing longevity," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -2464, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Fanti, Luciano & Gori, Luca, 2010. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," MPRA Paper 26146, University Library of Munich, Germany.
  7. Grégory Ponthière, 2012. "Fair Accumulation under Risky Lifetime," PSE - Labex "OSE-Ouvrir la Science Economique", HAL halshs-00746913, HAL.
  8. Luciano Fanti & Luca Gori, 2012. "Public Expenditure on Health and Private Old-Age Insurance in an OLG Growth Model with Endogenous Fertility: Chaotic Dynamics Under Perfect Foresight," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 40(4), pages 333-353, December.
  9. repec:hal:wpaper:halshs-00746913 is not listed on IDEAS

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