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Intergenerational earnings mobility and demographic dynamics: Welfare analysis of an aging Japan

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  • Okamoto, Akira

Abstract

This paper simulates the effects of intergenerational earnings mobility on individual welfare and future demography in an aging and depopulating Japan. A simulation analysis finds that increased intergenerational mobility across income classes promotes economic growth, and from a long-term perspective, a higher mobility potentially achieves Pareto improvements. In the long run, however, it will hinder economic growth. This is because increased mobility increases the population share of individuals with a higher labor productivity, enhancing economic growth in the initial stage, but because of their lower fertility, an increase in their population ratio negatively effects the total population over time.

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  • Okamoto, Akira, 2022. "Intergenerational earnings mobility and demographic dynamics: Welfare analysis of an aging Japan," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 76-104.
    • Handle: RePEc:eee:ecanpo:v:74:y:2022:i:c:p:76-104
    DOI: 10.1016/j.eap.2022.01.006
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    More about this item

    Keywords

    Intergenerational earnings mobility; Depopulating and aging societies; Demographic dynamics; Pareto improvements; Welfare analysis;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models

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