New age thinking
Subtitle: alternative ways of measuring age, their relationship to labor force participation, goverment policies and GDP
By: John B. Shoven.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- no. 13476.; Working paper series (National Bureau of Economic Research) -- working paper no. 13476.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 19
Subjects: Age distribution (Demography) -- Measurement; Age distribution (Demography) -- Economic aspects -- United States; Life expectancy -- Economic aspects -- United States; Older people -- Employment
Description: The current practice of measuring age as years-since-birth, both in common practice and in the law, rather than alternative measures reflecting a person's stage in the lifecycle distorts important behavior such as retirement, saving, and the discussion of dependency ratios. Two alternative measures of age are explored: mortality risk and remaining life expectancy. With these alternative measures, the huge wave of elderly forecast for the first half of this century doesn't look like a huge wave at all. By conventional 65+ standards, the fraction of the population that is elderly will grow by about 66 percent. However, the fraction of the population that is above a mortality rate that corresponds to 65+ today will grow by only 20 percent. Needless to say, the aging of the society is a lot less dramatic with the alternative mortality-based age measures. In a separate application of age measurement, I examine the consequences of stabilizing labor force participation by age with alternative age definitions. If labor force participation were to remain as it is today with respect to remaining life expectancy (i.e. if the length of retirement stayed where it is today) rather than labor force participation remaining fixed by conventionally-defined age, then there would be 9.6 percent more total labor supply by 2050 in the U.S. This additional labor supply could help finance entitlement programs amongst other things. GDP would be between seven and ten percent higher by 2050 if retirement lengths stabilize. Several policies are examined that would encourage longer work careers.
Notes: "October 2007"

Includes bibliographical references (p. 19).

Also available in PDF from the NBER World Wide Web site (www.nber.org).