TY - JOUR
T1 - Income growth in the 21st century: Forecasts with an overlapping generations model
AU - de la Croix, David
AU - Docquier, Frédéric
AU - Liégeois, Philippe
PY - 2007/10
Y1 - 2007/10
N2 - We forecast income growth over the period 2000-2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible to changes in the environment, we use a quantitative theoretical approach which involves calibrating and simulating a general equilibrium model. Compared to existing studies, we allow for life uncertainty and migrations, use generational accounting studies to link taxes and public expenditures to demographic changes, and take into account the interaction between education and work experience. Forecasts show that growth will be weaker over the period 2010-2040. The gap between the US and the two other countries is increasing over time. France will catch-up and overtake Canada in 2020. Investigating alternative policy scenarios, we show that increasing the effective retirement age to 63 would be most profitable for France, reducing the gap between it and the US by one third. A decrease in social security benefits would slightly stimulate growth but would have no real impact on the gap between the countries.
AB - We forecast income growth over the period 2000-2050 in the US, Canada, and France. To ground the forecasts on relationships that are as robust as possible to changes in the environment, we use a quantitative theoretical approach which involves calibrating and simulating a general equilibrium model. Compared to existing studies, we allow for life uncertainty and migrations, use generational accounting studies to link taxes and public expenditures to demographic changes, and take into account the interaction between education and work experience. Forecasts show that growth will be weaker over the period 2010-2040. The gap between the US and the two other countries is increasing over time. France will catch-up and overtake Canada in 2020. Investigating alternative policy scenarios, we show that increasing the effective retirement age to 63 would be most profitable for France, reducing the gap between it and the US by one third. A decrease in social security benefits would slightly stimulate growth but would have no real impact on the gap between the countries.
KW - Aging
KW - Computable general equilibrium
KW - Education
KW - Experience
KW - Forecast
UR - http://www.mendeley.com/research/income-growth-21st-century-forecasts-overlapping-generations-model
U2 - 10.1016/j.ijforecast.2007.07.003
DO - 10.1016/j.ijforecast.2007.07.003
M3 - Article
SN - 0169-2070
VL - 23
SP - 621
EP - 635
JO - International Journal of Forecasting
JF - International Journal of Forecasting
IS - 4
ER -