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Rate of Growth of Population, Saving and Wealth in the Basic Life-cycle Model when the Household is the Decision Unit


  • Carlo Casarosa

    () (Università di Pisa)

  • Luca Spataro

    () (Università di Pisa and CHILD)


In this paper we explore the impact of the life-cycle dynamics of family composition on the aggregate wealth-income ratio and on the aggregate propensity to save in the hypothesis of life-cycle behaviour. We depart from Modigliani-Brumberg’s basic model by assuming that the household, rather than the individual, is the relevant economic unit. In this framework we first explore the single household’s life-cycle paths of consumption, saving and wealth and point out the impact on such paths of the timing of births and of the rearing period of the children. We then show that both in a stationary economy and in economy with a steadily growing population the life-cycle dynamics of family composition affects strongly the aggregate wealth-income ratio and the distribution of wealth among the age-cohorts. Further and more importantly, we show that in an economy with a steadily growing population the aggregate propensity to save and the rate of growth of population move in opposite directions for a wide range of values of the timing of births and of the number of children per-household.

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  • Carlo Casarosa & Luca Spataro, 2007. "Rate of Growth of Population, Saving and Wealth in the Basic Life-cycle Model when the Household is the Decision Unit," CeRP Working Papers 64, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  • Handle: RePEc:crp:wpaper:64

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    More about this item


    Life-Cycle; Saving; Timing of Births; Population Growth;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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