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Labor productivity, labor supply of the old, and economic growth

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  • Chen, Hung-Ju
  • Miyazaki, Koichi

Abstract

This study develops an overlapping generations model with human capital accumulation and endogenous labor supply of the old to examine the effects of an old agent's labor productivity on labor supply, educational investments, and economic growth. We present a unique existence of the balanced-growth-path (BGP) equilibrium and find that a rise in an old agent's labor productivity induces more labor supply of the old. Moreover, the growth rate at the BGP equilibrium is hump-shaped in an old agent's labor productivity. As an old agent's labor productivity grows, this growth rate first increases then decreases, which implies that there is no clear negative relationship between an old agent's labor productivity and economic growth.

Suggested Citation

  • Chen, Hung-Ju & Miyazaki, Koichi, 2019. "Labor productivity, labor supply of the old, and economic growth," MPRA Paper 97372, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:97372
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    References listed on IDEAS

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    1. Robert J. Gordon, 2016. "The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War," Economics Books, Princeton University Press, edition 1, number 10544.
    2. Hung‐Ju Chen, 2018. "Fertility, retirement age, and pay‐as‐you‐go pensions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(6), pages 944-961, December.
    3. Philippe Michel & Pierre Pestieau, 2013. "Social Security And Early Retirement In An Overlapping-Generations Growth Model," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 723-737, November.
    4. Daron Acemoglu & Pascual Restrepo, 2017. "Secular Stagnation? The Effect of Aging on Economic Growth in the Age of Automation," American Economic Review, American Economic Association, vol. 107(5), pages 174-179, May.
    5. Miyazaki, Koichi, 2014. "Optimal pay-as-you-go social security when retirement is endogenous and labor productivity depreciates," MPRA Paper 61166, University Library of Munich, Germany.
    6. Chen Hung-Ju & Miyazaki Koichi, 2018. "Fertility and labor supply of the old with pay-as-you-go pension and child allowances," The B.E. Journal of Macroeconomics, De Gruyter, vol. 18(1), pages 1-19, January.
    7. Miyazaki, Koichi, 2019. "Optimal Pay-As-You-Go Social Security With Endogenous Retirement," Macroeconomic Dynamics, Cambridge University Press, vol. 23(2), pages 870-887, March.
    8. Lars Kunze, 2014. "Mandatory retirement and economic growth: An inverted U-shaped relationship," Economics Bulletin, AccessEcon, vol. 34(2), pages 885-891.
    9. Miyazaki, Koichi, 2014. "The effects of the raising-the-official-pension-age policy in an overlapping generations economy," Economics Letters, Elsevier, vol. 123(3), pages 329-332.
    10. Chen, Hung-Ju, 2016. "Fertility, Retirement Age, and PAYG Pensions," MPRA Paper 69819, University Library of Munich, Germany.
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    Cited by:

    1. Chen Hung-Ju & Miyazaki Koichi, 2022. "Pay-as-You-Go Social Security and Educational Subsidy in an Overlapping Generations Model with Endogenous Fertility and Endogenous Retirement," The B.E. Journal of Macroeconomics, De Gruyter, vol. 22(2), pages 787-820, June.

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    More about this item

    Keywords

    Human capital; OLG; Labor productivity; Labor supply of the old;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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