This paper presents a generalized model of overlapping generations with economic aging of households. Economic age is defined as a set of personal attributes such as earnings potential and tastes that are characteristic of a person's position in the life-cycle. We separate the concepts of economic age and time since birth in assuming only a small number of different states of age. Agents sharing the same economic characteristics are aggregated analytically to a low number of age groups. The model thus allows for a very parsimonious approximation of life-cycle differences in earnings, wealth and consumption. As an illustration, we quantitatively apply the model to study the impact of demographic change.
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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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