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Does Demography Change Wealth Inequality?

  • Miguel Sánchez-Romero
  • Stefan WrzaczekEmail author
  • Alexia Prskawetz
  • Gustav Feichtinger
Chapter
Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 687)

Abstract

In this article, we investigate the effect of demography on wealth inequality. We propose an economic growth model with overlapping generations in which individuals are altruistic towards their children and differ with respect to the age of their parent. We denote the age gap between the parent and their child as generational gap. The introduction of the generational gap allows us to analyze wealth inequality not only across cohorts but also within cohorts. Our model predicts that a decline in fertility raises wealth inequality within cohorts and, simultaneously, it reduces inequality at the population level (across cohorts). In contrast, increases in life expectancy result in a non-monotonic effect on wealth inequality by age and across cohorts.

Notes

Acknowledgment

We would like to acknowledge the comments and suggestions given by two anonymous referees. This project has received funding from the European Union’s Seventh Framework Program for research, technological development and demonstration under grant agreement no. 613247: “Ageing Europe: An application of National Transfer Accounts (NTA) for explaining and projecting trends in public finances”.

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Miguel Sánchez-Romero
    • 1
  • Stefan Wrzaczek
    • 1
    • 2
    Email author
  • Alexia Prskawetz
    • 1
    • 2
  • Gustav Feichtinger
    • 1
    • 2
  1. 1.Wittgenstein Centre for Demography and Global Human Capital (IIASA, VID/ÖAW, WU)Vienna Institute of Demography/Austrian Academy of SciencesViennaAustria
  2. 2.Vienna University of Technology (TU Wien)ViennaAustria

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