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Over-aging - Are present human populations too old?

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  • Robert Stelter

    (UNIVERSITY OF ROSTOCK, Institute for Economics, Chair for Business Cycles and Growth and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

This paper investigates the problem of an "optimum population" concerning age structures in a 3-period OLG-model with endogenous fertility and longevity. The first-best solution for a number-dampened total social welfare function, including Millian and Benthamite utilitarianism as two extreme cases, identifies the optimal age structure, generally failed in laissez-faire economies. As individuals don't internalize effects of longevity on life-cycle income, they overinvest in health. Additionally, they choose a non-optimal number of offspring. A calibration exercise for 80 countries emphasizes that an over-aging of populations crucially depends on social preferences and observed age structures. Interestingly, we find that in contrast to taxes on health expenditures, taxes or subsidies on children to decentralize the first-best solution are sensitive to social preferences.

Suggested Citation

  • Robert Stelter, 2015. "Over-aging - Are present human populations too old?," LIDAM Discussion Papers IRES 2015009, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2015009
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    More about this item

    Keywords

    endogenous fertility; adult mortality; optimal age structure; over-aging; optimal taxation;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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