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Does Demography Change Wealth Inequality?

In: Control Systems and Mathematical Methods in Economics

Author

Listed:
  • Miguel Sánchez-Romero

    (Vienna Institute of Demography/Austrian Academy of Sciences)

  • Stefan Wrzaczek

    (Vienna Institute of Demography/Austrian Academy of Sciences
    Vienna University of Technology (TU Wien))

  • Alexia Prskawetz

    (Vienna Institute of Demography/Austrian Academy of Sciences
    Vienna University of Technology (TU Wien))

  • Gustav Feichtinger

    (Vienna Institute of Demography/Austrian Academy of Sciences
    Vienna University of Technology (TU Wien))

Abstract

In this article, we investigate the effect of demography on wealth inequality. We propose an economic growth model with overlapping generations in which individuals are altruistic towards their children and differ with respect to the age of their parent. We denote the age gap between the parent and their child as generational gap. The introduction of the generational gap allows us to analyze wealth inequality not only across cohorts but also within cohorts. Our model predicts that a decline in fertility raises wealth inequality within cohorts and, simultaneously, it reduces inequality at the population level (across cohorts). In contrast, increases in life expectancy result in a non-monotonic effect on wealth inequality by age and across cohorts.

Suggested Citation

  • Miguel Sánchez-Romero & Stefan Wrzaczek & Alexia Prskawetz & Gustav Feichtinger, 2018. "Does Demography Change Wealth Inequality?," Lecture Notes in Economics and Mathematical Systems, in: Gustav Feichtinger & Raimund M. Kovacevic & Gernot Tragler (ed.), Control Systems and Mathematical Methods in Economics, pages 349-375, Springer.
    • Handle: RePEc:spr:lnechp:978-3-319-75169-6_17
    DOI: 10.1007/978-3-319-75169-6_17
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    Cited by:

    1. Patrik Rovný & Serhiy Moroz & Jozef Palkovič & Elena Horská, 2021. "Impact of Demographic Structure on Economic Development of Ukrainian Coastal Regions," Sustainability, MDPI, vol. 13(4), pages 1-19, February.

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