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How Powerful is Demography? The Serendipity Theorem Revisited

Author

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  • David de la CROIX

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques etSsociales (IRES) and Center for Operations Research and Econometrics (CORE))

  • Pierre PESTIEAU

    (University of Liege, CORE, Paris School of Economics and CEPR)

  • Gregory PONTHIERE

    (Paris School of Economics and Ecole Normale Superieure, Paris)

Abstract

Introduced by Samuelson (1975), the Serendipity Theorem states that the competitive economy will converge towards the optimum steady-state provided the optimum population growth rate is imposed. This paper aims at exploring whether the Serendipity Theorem still holds in an economy with risky lifetime. We show that, under general conditions, including a perfect annuity market with actuarially fair return, imposing the optimum fertility rate and the optimum survival rate leads the competitive economy to the optimum steady-state. That Extended Serendipity Theorem is also shown to hold in economies where old adults work some fraction of the old-age, whatever the retirement age is fixed or chosen by the agents.

Suggested Citation

  • David de la CROIX & Pierre PESTIEAU & Gregory PONTHIERE, 2009. "How Powerful is Demography? The Serendipity Theorem Revisited," LIDAM Discussion Papers IRES 2009040, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2009040
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    References listed on IDEAS

    as
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    Cited by:

    1. Pierre Pestieau & Gregory Ponthiere, 2017. "Optimal fertility under age-dependent labour productivity," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(2), pages 621-646, April.
    2. Pierre Pestieau & Gregory Ponthiere, 2012. "The Public Economics of Increasing Longevity," Hacienda Pública Española / Review of Public Economics, IEF, vol. 200(1), pages 41-74, March.
    3. Luciano Fanti & Luca Gori, 2012. "Public Expenditure on Health and Private Old-Age Insurance in an OLG Growth Model with Endogenous Fertility: Chaotic Dynamics Under Perfect Foresight," Computational Economics, Springer;Society for Computational Economics, vol. 40(4), pages 333-353, December.
    4. Cipriani, Giam Pietro & Fioroni, Tamara, 2022. "Social security and endogenous demographic change: child support and retirement policies," Journal of Pension Economics and Finance, Cambridge University Press, vol. 21(3), pages 307-325, July.
    5. Pierre Pestieau & Gregory Ponthiere, 2014. "Optimal fertility along the life cycle," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(1), pages 185-224, January.
    6. Gregory Ponthiere, 2013. "Fair Accumulation under Risky Lifetime," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(2), pages 210-230, May.
    7. Stelter, Robert, 2014. "Over-aging: Are present human populations too old?," Thuenen-Series of Applied Economic Theory 137, University of Rostock, Institute of Economics.
    8. Ziesemer, Thomas, 2018. "The serendipity theorem for an endogenous open economy growth model," MERIT Working Papers 2018-001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Paolo Melindi-Ghidi & Willem Sas, 2015. "Invest as You Go: How Public Health Investment Keeps Pension Systems Healthy," AMSE Working Papers 1525, Aix-Marseille School of Economics, France.
    10. Stelter, Robert, 2016. "Over-aging — Are present-day human populations too old?," Mathematical Social Sciences, Elsevier, vol. 82(C), pages 116-143.
    11. Momota, Akira & Sakagami, Tomoya & Shibata, Akihisa, 2019. "Reexamination of the Serendipity Theorem from the stability viewpoint," Journal of Demographic Economics, Cambridge University Press, vol. 85(1), pages 43-70, March.
    12. Luciano Fanti & Luca Gori, 2014. "Endogenous fertility, endogenous lifetime and economic growth: the role of child policies," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 529-564, April.
    13. Momota, Akira, 2016. "Intensive and extensive margins of fertility, capital accumulation, and economic welfare," Journal of Public Economics, Elsevier, vol. 133(C), pages 90-110.
    14. Stefan Felder, 2016. "“How powerful is demography? The serendipity theorem revisited” comment on De la Croix et al. (2012)," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(3), pages 957-967, July.
    15. Thomas I. Renström & Luca Spataro, 2015. "Population Growth and Human Capital: A Welfarist Approach," Manchester School, University of Manchester, vol. 83, pages 110-141, December.
    16. Robert TAMURA & David CUBERES, 2020. "Equilibrium and A-efficient Fertility with Increasing Returns to Population and Endogenous Mortality," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 86(2), pages 157-182, June.

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    More about this item

    Keywords

    Serendipity Theorem; fertility; mortality; overlapping generations; retirement;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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