Effects of the Changing U.S. Age Distribution on Macroeconomic Equations
The effects of the changing U.S. age distribution on various macroeconomic equations are examined in this paper. The equations include consumption, money demand, housing investment, and labor force participation equations. Seven age groups are analyzed: 16-19, 20-24, 25-29, 30-39, 40- 54, 55-64, and 65+. There seems to be enough variance in the age distribution data to allow reasonably precise estimates of the effects of a number of age categories on the macro variables. The results show that, other things being equal, age groups 30-39 and 40-54 consume less than average, invest less in housing than average, and demand more money than average. Age group 55-64 consumes more and demands more money. If these estimates are right, they imply, other things being equal, that consumption and housing investment will be negatively affected in the future as more and more baby boomers enter the 30-54 age group. The demand for money will be positively affected. If, as Easterlin argues, the average wage that an age group faces is negatively affected by the percent of the population in that group, then the labor force participation rate of a group should depend on the relative size of the group. If the substitution effect dominates, people in a large group should work less than average, and if the income effect dominates, they should work more than average. The results indicate that the substitution effect dominates for women 25-54 and that the income effect dominates for men 25-54.
|Date of creation:||Jun 1987|
|Date of revision:|
|Publication status:||published as The American Economic Review, Vol. 81, No. 5, pp. 1276-1294, (December 1991).|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Blinder, Alan S, 1975. "Distribution Effects and the Aggregate Consumption Function," Journal of Political Economy, University of Chicago Press, vol. 83(3), pages 447-75, June.
- Fair, Ray C, 1987.
"International Evidence on the Demand for Money,"
The Review of Economics and Statistics,
MIT Press, vol. 69(3), pages 473-80, August.
- Ray C. Fair, 1986. "International Evidence on the Demand for Money," Cowles Foundation Discussion Papers 813, Cowles Foundation for Research in Economics, Yale University.
- Ray C. Fair, 1986. "International Evidence on the Demand for Money," NBER Working Papers 2106, National Bureau of Economic Research, Inc.
- Hayashi, Fumio & Sims, Christopher A, 1983. "Nearly Efficient Estimation of Time Series Models with Predetermined, but Not Exogenous, Instruments," Econometrica, Econometric Society, vol. 51(3), pages 783-98, May.
- von Furstenberg, George M, 1980. "Private Saving," American Economic Review, American Economic Association, vol. 70(2), pages 177-81, May.
- Hendry, David F. & Pagan, Adrian R. & Sargan, J.Denis, 1984. "Dynamic specification," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 18, pages 1023-1100 Elsevier.
- Donald W.K. Andrews & Ray C. Fair, 1987.
"Inference in Econometric Models with Structural Change,"
Cowles Foundation Discussion Papers
832, Cowles Foundation for Research in Economics, Yale University.
- Andrews, Donald W. K. & Fair, Ray C., 1987. "Inference in Econometric Models with Structural Change," Working Papers 636, California Institute of Technology, Division of the Humanities and Social Sciences.
- Hanushek, Eric A. & Quigley, John M., 1979. "The dynamics of the housing market: A stock adjustment model of housing consumption," Journal of Urban Economics, Elsevier, vol. 6(1), pages 90-111, January.
- James Tobin, 1956.
"Liquidity Preference as Behavior Towards Risk,"
Cowles Foundation Discussion Papers
14, Cowles Foundation for Research in Economics, Yale University.
- Berger, Mark C, 1985. "The Effect of Cohort Size on Earnings Growth: A Reexamination of the Evidence," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 561-73, June.
- Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-69, June.
- Heien, Dale M, 1972. "Demographic Effects and the Multiperiod Consumption Function," Journal of Political Economy, University of Chicago Press, vol. 80(1), pages 125-38, Jan.-Feb..
- Stoker, Thomas M, 1986. "Simple Tests of Distributional Effects on Macroeconomic Equations," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 763-95, August.
- George L. Perry, 1977. "Potential Output and Productivity," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 8(1), pages 11-60.
- Denton, Frank T & Spencer, Byron G, 1976. "Household and Population Effects on Aggregate Consumption," The Review of Economics and Statistics, MIT Press, vol. 58(1), pages 86-95, February.
- Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2280. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.