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Introducing Demographic Changes in a Model of Economic Growth and Income Distribution

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  • Codrina Rada

Abstract

Unprecedented demographic changes are set to unfold in most of the industrialized world. They are relevant not only because of the diminishing pool of workers, but also because of the increasing importance of retirees as an economic class. Retirees consumption and saving patterns can differ considerably from those of wage earners and capitalists, as retirees tend to consume more services and save less or in fact dissave. From this perspective of changing aggregate consumption and saving patterns I argue that population aging together with existing constraints to growth and the institutional framework in place leads to a reconfiguration of income distribution and therefore to possible changes in the growth rate of the economy. Understanding how future income distribution may look like and the behavior of different economic classes, helps in designing the right policies to accommodate the demographic transition.

Suggested Citation

  • Codrina Rada, 2009. "Introducing Demographic Changes in a Model of Economic Growth and Income Distribution," Working Paper Series, Department of Economics, University of Utah 2009_01, University of Utah, Department of Economics.
  • Handle: RePEc:uta:papers:2009_01
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    References listed on IDEAS

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    More about this item

    Keywords

    population aging; income distribution and growth; Keynesian macroeconomics;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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