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Aging, Fertility and Macroeconomic Dynamics

Author

Listed:
  • Aurelien Eyquem

    (Univ Lyon, Université Lumière Lyon 2, GATE UMR 5824, F-69130 Ecully, France; Institut Universitaire de France.)

  • Masahige Hamano

    (Faculty of Political Science and Economics, Waseda University, 1-6-1 Nishiwaseda Shinjuku-ku, Tokyo 169-8050, Japan.)

Abstract

A tractable model with heterogeneous households is proposed to analyze the two-way interactions between demographic and macroeconomic variables. Total population and labor market participation are both endogenous and affected by economic as well as demographic factors.In addition, demographic factors have direct effects on aggregate productivity through selection effects on the labor market. We show that aging and negative fertility shocks have opposite predictions in terms of their effects on GDP per capita and aggregate productivity.A quantitative exercise based on Japanese data suggests that an aging shock alone has relatively little effects and falls short in replicating the data, while considering negative fertility shocks fits the data much better.

Suggested Citation

  • Aurelien Eyquem & Masahige Hamano, 2022. "Aging, Fertility and Macroeconomic Dynamics," Working Papers 2121, Waseda University, Faculty of Political Science and Economics.
    • Handle: RePEc:wap:wpaper:2121
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    References listed on IDEAS

    as
    1. Cooley, Thomas & Henriksen, Espen, 2018. "The demographic deficit," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 45-62.
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    3. Finn Kydland & Nicholas Pretnar, 2018. "The Costs and Benefits of Caring: Aggregate Burdens of an Aging Population," 2018 Meeting Papers 271, Society for Economic Dynamics.
    4. Katagiri, Mitsuru & Konishi, Hideki & Ueda, Kozo, 2020. "Aging and deflation from a fiscal perspective," Journal of Monetary Economics, Elsevier, vol. 111(C), pages 1-15.
    5. Masashige Hamano & Francesco Zanetti, 2017. "Endogenous Turnover and Macroeconomic Dynamics," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 263-279, October.
    6. Kitao, Sagiri, 2015. "Fiscal cost of demographic transition in Japan," Journal of Economic Dynamics and Control, Elsevier, vol. 54(C), pages 37-58.
    7. Antonin Bergeaud & Gilbert Cette & Rémy Lecat, 2016. "Productivity Trends in Advanced Countries between 1890 and 2012," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 420-444, September.
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    9. Greg Kaplan & Giovanni L. Violante, 2018. "Microeconomic Heterogeneity and Macroeconomic Shocks," Journal of Economic Perspectives, American Economic Association, vol. 32(3), pages 167-194, Summer.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Heterogeneous workers; Aging; Productivity; Labor markets.;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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