We develop a calibrated general equilibrium model of a small open economy to examine some macroeconomic and distributional effects of an aging population. The model features overlapping generations with a public pension system, asymmetric information in the labor market, and includes some...

Given the fundamental goal of raising living standards in the longer term, much attention is paid to policies that can be expected to increase national saving. With respect to private saving, the mechanism is tax reform – a lower tax on interest income. The basic problem with this approach is...

The federal government has implemented an earned income tax credit – what it has called the Working Income Tax Benefit – in the 2007 Budget. Edmund Phelps has argued that the earned income tax credit in the United States should be replaced with an employment subsidy. This paper assesses the...

Many analysts expect the aging population to lead to a reduction in the growth of living standards. Income inequality – a problem that has been accentuated by the payroll tax hikes that were necessary to fund the public pension as the population ages – is becoming an increasing challenge at...

The aging population has raised at least two concerns about tax policy. First, taxes will need to be increased to cover higher public-pension and medical-care expenses when baby boomers have retired. Second, taxes can be cut in the meantime, as the government realizes the "fiscal dividend" that...

The federal government has implemented an earned income tax credit what it has called the Working Income Tax Benefit in the 2007 Budget. Edmund Phelps has argued that the earned income tax credit in the United States should be replaced with an employment subsidy. This paper assesses the...

Population aging creates both a problem (higher taxes on a small group of workers to finance higher public pension and health care costs) and automatic adjustments that help to address that problem. The prospect of longer retirement involves an increased incentive to invest in physical capital,...

Many analysts expect the aging population to lead to a reduction in the growth of living standards. Income inequality – a problem that has been accentuated by the payroll tax hikes that were necessary to fund the public pension as the population ages – is becoming an increasing challenge at...

The aging population has raised at least two concerns about tax policy. First, taxes will need to be increased to cover higher public-pension and medical-care expenses when baby boomers have retired. Second, taxes can be cut in the meantime, as the government realizes the "fiscal dividend" that...