Abstract
This paper presents a new method to clarify intergenerational effects of the demographic change in industrialized countries, i.e., the trend of aging. Recognized effects of aging are twofold; a disincentive effect and a product variety effect. The results are consistent with the empirical findings in Cutler et al. (1990). With the evidence, our model predicts that “diminished fertility represents a problem rather than an opportunity,” and that “diminished mortality represents an opportunity rather than a problem.”
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Anderson, S. P., A. de Palma and J.-F. Thisse. (1997). "Privatization and Efficiency in a Differentiated Industry." European Economic Review 41, 1635–1654.
Blanchard, O. J. (1985). "Debt, Deficits, and Finite Horizons." Journal of Political Economy 93, 223–247.
Calvo, A. G. and M. Obstfeld. (1988). "Optimal Time-Consistent Fiscal Policy with Finite Lifetimes: Analysis and Extensions." In E. Helpman, A. Razin and E. Sadka (eds.), Economic Effects of the Government Budget. Cambridge: MIT Press.
Costrell, R. M. (1990). "Second-Best Subsidies in Monopolistic Competition." Economics Letters 34, 205–209.
Cremer, H. and J.-F. Thisse. (1994). "Commodity Taxation in a Differentiated Oligopoly." International Economic Review 35, 613–633.
Cutler, D. M. et al. (1990). "An Aging Society: Opportunity or Challenge?" Brookings Papers on Economic Activity 1, 1–73.
Dixit, A. K. and J. E. Stiglitz. (1977). "Monopolistic Competition and Optimum Product Diversity." American Economic Review 67, 297–308.
Eaton, J. and H. S. Rosen. (1980). "Taxation, Human Capital, and Uncertainty." American Economic Review 70, 705–715.
Hamilton, S. F. (1999). "Tax Incidence under Oligopoly: A Comparison of Policy Approaches." Journal of Public Economics 71, 233–245.
Hu, S.-C. (1999). "Economic Growth in the Perpetual-Youth Model: Implications of the Annuity Market and Demographics." Journal of Macroeconomics 21, 107–124.
Kalemli-Ozcan, S., H. E. Ryder and D. N. Weil. (1998). "Mortality Decline, Human Capital Investment, and Economic Growth." Brown University Working Paper 98–18.
Levhari, D. and Y. Weiss. (1974). "The Effect of Risk on the Investment in Human Capital." American Economic Review 64, 950–963.
Lord, W. and P. Rangazas. (1998). "Capital Accumulation and Taxation in a General Equilibrium Model with Risky Human Capital." Journal of Macroeconomics 20, 509–531.
Lucas, R. E., Jr. (1988). "On the Mechanics of Economic Development." Journal of Monetary Economics 22, 3–42.
Miyazawa, K. (1999). "Incentives and Product Variety in an Aging Economy," reported in the 1999 Congress of the Japanese Economic Association at Kagawa University, Japan.
Rosenzweig, M. R. and O. Stark. (1997). "Introduction: Population and Family Economics." In M. R. Rosenzweig, and O. Stark (eds.), Handbook of Population and Family Economics. North-Holland: Amsterdam.
Spence, M. (1976). "Product Selection, Fixed Costs, and Monopolistic Competition." Review of Economic Studies 43, 217–235.
Stern, N. (1987). "The Effects of Taxation, Price Control and Government Contracts in Oligopoly and Monopolistic Competition." Journal of Public Economics 32, 133–158.
Tanaka, Y. (1993). "Optimal Taxation under Monopolistic Competition." Keio Economic Studies 30, 7–17.
Weil, D. N. (1997). "The Economics of Population Aging." In M. R. Rosenzweig and O. Stark (eds.), Handbook of Population and Family Economics. North-Holland: Amsterdam.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Miyazawa, K. Incentives and Product Variety in an Aging Economy. International Tax and Public Finance 8, 595–607 (2001). https://doi.org/10.1023/A:1011280705020
Issue Date:
DOI: https://doi.org/10.1023/A:1011280705020