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Income Growth in the 21st century : forecasts with an overlapping generations model

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Author Info

  • David, DE LA CROIX

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics and CORE)

  • Frédéric DOCQUIER

    (FNRS and UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

  • Philippe, LIEGEOIS

    (CEPS, INSTEAD, Luxemburg)

Abstract

We forecast income growth over the periode 2000-2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible t changes in the environment, we use a quantitative theoretical approach which consists in calibrating and simulating a general equilibrium model. Compared to existing studies to link taxes and public expenditures to demographic changes, and take into account the interaction between education and work experience. Forecasts show that growth will be weaker over the period 2010-2040. The gap between the US and the two other countries is increasing over time. France will catch-up and overtake Canada in 2020. Investigating alternative policy scenarios, we show that increasing the effective retirement age to 63 would be most profitable for France, reducing its gap with US by one third. A decrease in social security benefits would slightly stimulate growth but would have no real impact on the gap between the countries.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2007029.

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Length: 36
Date of creation: 01 Sep 2007
Date of revision:
Handle: RePEc:ctl:louvec:2007029

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Keywords: Aging; Forecast; Computable General Equilibrium; Education; Experience;

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Cited by:
  1. David de la Croix & Olivier Pierrard & Henri R. Sneessens, 2011. "Aging and Pensions in General Equilibrium: Labor Market Imperfections Matter," BCL working papers 62, Central Bank of Luxembourg.
  2. Xavier Chojnicki & Frédéric Docquier & Lionel Ragot, 2011. "Should the US have locked heaven’s door?," Journal of Population Economics, Springer, vol. 24(1), pages 317-359, January.
  3. Luca Marchiori, 2011. "Demographic Trends and International Capital Flows in an Integrated World," CREA Discussion Paper Series 11-05, Center for Research in Economic Analysis, University of Luxembourg.
  4. Luca Marchiori & Patrice Pieretti & Benteng Zou, 2010. "The impact of migration on origin countries: a numerical analysis," CREA Discussion Paper Series 10-06, Center for Research in Economic Analysis, University of Luxembourg.
  5. Olivier Pierrard & Henri R. Sneessens & David de la Croix, 2010. "Ageing, Pensions and The Labour Market," 2010 Meeting Papers 779, Society for Economic Dynamics.

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