Dissertation

Table 3.12: The effect of population aging on the households’ IRRs under different α- values.

(a) With capital’s share of α = 0.3.
Experiment β_ϕ=0.16 β_ϕ=0.37 β_ϕ=0.58 β_ϕ=0.79 β_ϕ=1 Rate of return

Baseline 0.0501 0.0322 0.0256 0.0221 0.0199 0.0285
1 0.0433 0.0242 0.0172 0.0135 0.0112 0.0232
2 0.0428 0.0234 0.0165 0.0128 0.0105 0.0195
3 0.0421 0.0226 0.0157 0.0121 0.0098 0.0158

(b) With capital’s share of α = 0.4.
Experiment β_ϕ=0.2 β_ϕ=0.4 β_ϕ=0.6 β_ϕ=0.8 β_ϕ=1 Rate of return

Baseline 0.0489 0.0327 0.0256 0.0215 0.0189 0.0293

1 0.0415 0.0246 0.0172 0.013 0.0103 0.0237
2 0.0408 0.0238 0.0165 0.0123 0.0096 0.0201
3 0.0399 0.023 0.0157 0.0116 0.0089 0.0165

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Table 3.13: The effect of population aging on the households’ labor supply over the life- cycle.

(a) Labor supply responses with α = 0.3.
Experiment ϕ = 0.16 ϕ = 0.37 ϕ = 0.58 ϕ = 0.79 ϕ = 1

Baseline 0.86 2.33 3.81 5.29 6.76 1 1.01 2.82 4.63 6.43 8.24 2 1.07 2.99 4.92 6.85 8.78 3 1.14 3.18 5.23 7.28 9.33

(b) Labor supply responses with α = 0.4. Experiment ϕ = 0.2 ϕ = 0.4 ϕ = 0.6 ϕ = 0.8 ϕ = 1

Baseline 1.05 2.49 3.94 5.38 6.82 1 1.26 3.01 4.76 6.52 8.28 2 1.34 3.22 5.1 6.98 8.86 3 1.45 3.46 5.46 7.47 9.48
the beneficiaries of the social security program also appears to be robust to the value of

capital’s share in total income used in the simulations.

In Table 3.13, I demonstrate that the asymmetry in the labor supply responses from

the different efficiency groups is behind the asymmetric declines in the respective IRRs.

The table reports expected labor supply over the life-cycle (in efficiency units) for the

different efficiency groups under the three experiments, with the social security tax rates

held fixed at their respective baseline levels with different α values. The table shows a

pattern similar to that observed under the baseline case: households with higher efficiency

experience larger delays in retirement than households with lower efficiency under both

α = 0.3 and 0.4. Across the baseline calibration and experiment 3, life-cycle labor supply

for the five efficiency groups increases by roughly 32.3, 36.4, 37.4, 37.8 and 38% respectively

under α = 0.3, and by roughly 37.6, 38.6, 38.8, 38.9 and 39% respectively under α = 0.4.

Once again, the relatively larger increases in labor supply experienced by the more efficient

households serves to transfer a larger tax burden onto them, which has a larger negative

impact on their IRRs from social security.

Decomposing households labor supply responses over the life-cycle under the different α-

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