Old Folks and Spoiled Brats: Why the baby Boomers' Saving Crisis Need Not be that Bad

M. Butler, P. Harms

Research output: Working paperDiscussion paperOther research output

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Abstract

We study the impact of an anticipated "baby boom" in an overlapping generations economy.The rise of the working population lowers the wage, and the high demand for assets causes a rise in the price of capital which will be reversed when the baby boomers leave the work-force.However, the swings in factor prices are substantially dampened if we allow for more than two generations, endogenous labor supply, and convex capital adjustment costs.This is mainly due to the intertemporal shifts in labor market participation that can be observed if agents work for more than one period.Optimal saving and labor supply decisions of the baby boomers' preceding and subsequent generations partly offset the impact of the unfavorable demographic shock.Accordingly, the impact of a baby boom on the welfare of different generations crucially depends on the elasticity of labor supply.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages28
Volume2001-42
Publication statusPublished - 2001

Publication series

NameCentER Discussion Paper
Volume2001-42

Fingerprint

Baby boomers
Labor supply
Baby boom
Workforce
Elasticity
Factor prices
Demographic shocks
Labour market participation
Capital adjustment costs
Wages
Endogenous labor supply
Assets
Overlapping generations

Keywords

  • labour market
  • savings
  • share prices
  • population dynamics

Cite this

Butler, M., & Harms, P. (2001). Old Folks and Spoiled Brats: Why the baby Boomers' Saving Crisis Need Not be that Bad. (CentER Discussion Paper; Vol. 2001-42). Tilburg: Macroeconomics.
Butler, M. ; Harms, P. / Old Folks and Spoiled Brats : Why the baby Boomers' Saving Crisis Need Not be that Bad. Tilburg : Macroeconomics, 2001. (CentER Discussion Paper).
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Butler, M & Harms, P 2001 'Old Folks and Spoiled Brats: Why the baby Boomers' Saving Crisis Need Not be that Bad' CentER Discussion Paper, vol. 2001-42, Macroeconomics, Tilburg.

Old Folks and Spoiled Brats : Why the baby Boomers' Saving Crisis Need Not be that Bad. / Butler, M.; Harms, P.

Tilburg : Macroeconomics, 2001. (CentER Discussion Paper; Vol. 2001-42).

Research output: Working paperDiscussion paperOther research output

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Butler M, Harms P. Old Folks and Spoiled Brats: Why the baby Boomers' Saving Crisis Need Not be that Bad. Tilburg: Macroeconomics. 2001. (CentER Discussion Paper).