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  1. 1

    Mortality risk and consumption by couples.

    Hurd M

    Santa Monica, California, RAND, Labor and Population Program, 1999 Mar. [50] p. (Labor and Population Program Working Paper Series 99-03; DRU-2061-NIA)

    The goal of this paper is to analyze a model to explain consumption by couples. It is an extension of the model for singles by Yaari (1965), and therefore emphasizes the role of mortality risk. It also allows for a what I call a "true" bequest motive, bequeathing by a couple to the next generation, or at least to others outside of their own two-person household. The distinction between a true bequest motive and simply the provision for a surviving spouse is important because the surviving spouse is the extension of the original household, and the survivor had a direct influence in choosing the consumptions by the couple when the deceased spouse was alive. This makes the situation very different from a true bequest where the bequest depends at least partly on motives other than purely selfish consumption and where the bequeathed has no direct control on the consumption by the household. There is also a difference in the planning horizon which causes important differences for public policy: if a couple desires to give bequests to their children, and possibly to their grandchildren, they will act in a very different way in response to, say, an increase in Social Security benefits than if they only want to bequeath to each other. (excerpt)
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  2. 2

    Transitional dynamics in two-sector models of endogenous growth.

    Mulligan CB; Sala-i-Martin X

    New Haven, Connecticut, Yale University, Economic Growth Center, 1992 Jan. 59 p (Center Discussion Paper No. 651)

    The steady state and transitional dynamics of two-sector models of endogenous growth are analyzed in this paper. We describe necessary conditions for endogenous growth. The conditions allow us to reduce the dynamics of the solution to a system with one state-like and two control-like variables. We analyze the determinants of the long run growth rate. We use the Time-Elimination Method to analyze the transitional dynamics of the models. We find that there are transitions in real time if the point-in-time production possibility frontier is strictly concave, which occurs, for example, if the two production functions are different or if there are decreasing point-in-time returns in any of the sectors. We also show that if the models have a transition in real time, the models are globally saddle path stable. We find that the wealth or consumption smoothing effect tends to dominate the substitution or real wage effect so that the transition from relatively low levels of physical capital is carried over through high work effort rather than high savings. We develop some empirical implications. We show that the models predict conditional convergence in that, in a cross section, the growth rate is predicted to be negatively related to initial income but only after some measure of human capital is held constant. Thus, the models are consistent with existing empirical cross country evidence. (author's)
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  3. 3

    Saving and endogenous growth: a survey of theory and policy.

    Buiter WH

    New Haven, Connecticut, Yale University, Economic Growth Center, 1991 Sep. 58 p. (Center Discussion Paper No. 642)

    The paper surveys and extends recent results on the effect of changes in government fiscal and financial policy and in private savings behavior on economic growth. Private saving behavior is represented by an OLG model. The supply side of the model permits endogenous growth through aggregate constant returns to an augmentable input. Private sector behavior is parameterized with the time preference rate, the intertemporal elasticity of substitution, the birth rate, the death rate and the rate at which labor productivity declines with age. Fiscal instruments include public consumption spending, the capital income tax rate, deficit financing and balanced-budget intergenerational redistribution (an unfunded social security retirement scheme). (author's)
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  4. 4

    Impact of HIV / AIDS on saving behaviour in South Africa. Draft.

    Freire S

    [Unpublished] 2002 Jun 7. 18 p.

    The models measuring the macroeconomic impact of HIV/AIDS are heterogeneous : each one relies on a specific theoretical background. Nevertheless, there are at least, three main common limits to those approaches : the authors concentrate on the impact on the labour market ; they neglect the potential implications on the capital market ; and they do not model some essential microeconomic impacts such as the change in the agents' economic behaviour. More specifically, the analysis of the impact of HIV/AIDs on savings takes into account direct costs such as health expenditures, seldom indirect costs like the anticipation of funeral costs and they do not model di¤ered indirect costs. The paper proposes an analysis of this last kind of implications through the impact of the epidemic on the saving behaviour. This paper focuses on the uncertainty of life expectancy and is based on two frameworks: the Galí (1990) model which considers the life cycle theory with a ...nite horizon at the aggregate level and the Moresi (1999) model which specifies a peculiar consumption utility function through uncertain lifetime. The calibaration and simulations of our model reveal a significant drop in future saving rate in South Africa under the hypothesis of a virus evolution similar to the one given by the UN Population Division : the saving rate in 2015, under those hypothesis, should be at least 5 percentage points inferior to the estimated saving rate that would then prevail in the absence of the epidemic. (author's)
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  5. 5

    BP statistical review of world energy.

    British Petroleum Company

    London, England, British Petroleum Company, 1990. [2], 36, [1] p.

    1989 data as well as annual statistics from 1979-89 are provided in this review of world energy. There are statistics by country and region on oil (reserves and time series data on production, consumption, regional consumption by product groups, crude oil prices, refinery capacities and throughputs, and 1989 trade movements); natural gas (reserves and trade movements for 1989 and time series for production, consumption, and gas prices); coal (reserves for 1989 and time series for production and consumption); nuclear energy consumption, 1979-89; hydroelectricity consumption, 1979-89; and primary energy consumption, 1979-89, and 1988 consumption by fuel type. World energy demand increased by 2%, which is the slowest rate since 1983. The decline is attributed to warmer weather, slower economic growth, and higher oil prices. World demand for oil has risen to the 1979 levels of nearly 65 million barrels/day. Natural gas production increased by 3.2% World coal increased only 1.5%, but in China it increased 8%, and it declined in the USSR and eastern Europe by 4%. Nuclear energy has grown the fastest (11%) in recent years, but in 1989 the increase was only 3.6%. Data are also available on computer diskette in IBM compatible Lotus 1-2-3 format for this edition or an abridged addition for students.
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  6. 6

    Selling energy conservation.

    Hinrichsen D

    PEOPLE AND THE PLANET. 1995; 4(1):18.

    This article concerns the Organization of the Petroleum Exporting Countries (OPEC) crisis and its impact on energy efficiency measures in the US. In 1985, when the OPEC collapsed, the US government had avoided the need to construct 350 gigawatts of new electric capacity. The most successful efficiency improvements, especially in household appliances and equipment, lighting and tightened energy efficiency standards in new buildings, resulted from the OPEC event. The real innovation of that time was the change in profit rules for utilities. This revolution and the way some US utilities view energy have not caught on elsewhere. Despite the initiative toward improving energy efficiency in homes, offices and industries, the change has been slow. Partly to blame are the big development banks, which pointed out that short-term conservation and efficiency measures could save at least 15% of the total energy demand without the need for major investment. The benefits of energy conservation was shown during the oil shock when per capita energy consumption fell by 5% in the member states of the Organization of Economic Cooperation and Development, while the per capita gross domestic product grew by a third. There has been a decrease in energy expenditure worldwide, and the scope for further energy savings is enormous, but governments need to recognize and seize the opportunity.
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  7. 7
    Peer Reviewed

    Gender and savings in rural India.

    Deolalikar A; Rose E

    JOURNAL OF POPULATION ECONOMICS. 1998; 11(4):453-70.

    In this study we use data from rural India to examine the impact of the birth of a boy relative to the birth of a girl (i.e., the `gender shock') on the savings, consumption and income of rural Indian households. We find that the gender shock reduces savings for medium and large farm households, although there is no evidence that the shock affects savings for the landless and the small farm households. We also estimate the effect of the shock on income and consumption for the former group in order to determine the source of the drop in savings. (EXCERPT)
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  8. 8

    Dynamics of demographic development and its impact on personal saving: case of Japan.

    Ando A; Moro A; Cordoba JP; Garland G

    RICERCHE ECONOMICHE. 1995 Sep; 49(3):179-205.

    A dynamic model of the demographic structure of Japan is summarized. It is capable of tracing the dynamic development of the Japanese population, including the distribution of families by age, sex, and marital status of the head, as well as by the number and age of children and other dependents. This model is combined with specification of the processes generating family income and consumption, and then used to generate the pattern of aggregate income, saving and asset accumulation for the period 1985-2050 under alternative fertility assumptions. The results suggest that the saving-income ratio for Japan will increase slightly in the immediate future as the number of children per family declines sharply, and then falls moderately as the proportion of older persons in the population increases. Qualitative results depend critically on the labour force participation rate of older persons and on the probability of older persons merging into younger households. (EXCERPT)
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  9. 9

    The consequences of adult ill-health.

    Over M; Ellis RP; Huber JH; Solon O

    In: The health of adults in the developing world, edited by Richard G.A. Feachem, Tord Kjellstrom, Christopher J.L. Murray, Mead Over, Margaret A. Phillips. New York, New York, Oxford University Press, 1992. 161-207.

    The consequences of adult ill-health are greater than previously believed. These consequences go beyond suffering and grief and consist of indirect adverse effects on society which increase the cost of adult ill-health in developing countries. At the household level, family and friends try to reduce the effects of an illness or injury afflicting an adult household member. Work colleagues increase their workload to pick up the slack of the ill or injured colleague. An unhealthy labor force results in slow work schedules and less specialization of employee job descriptions. These coping processes reduce the effects of illness, but are costly. Yet traditional empirical studies do not examine them. Anticipatory coping mechanisms to mitigate adverse consequences of adult ill-health include formal and nonformal insurance mechanisms, both of which bear high costs. Informal insurance mechanisms include high fertility and extended families and social networks. Formal mechanisms are investment and savings and formal health insurance. Further, adult ill-health harms children more than child ill-health harms adults. thus, the total ill-health burden of children is greater than originally surmised. Household costs of adult ill-health are effect on production and earnings, on investment and consumption, and on household health and consumption and psychic costs. At least 70% of hospital resources in developing countries goes to adult and elderly patients. A considerable proportion of primary care costs is also dedicated to adults. Even though researchers agree that disease affects income, this effect is preceded and overshadowed by the effect of disease on health status, of health status on functional capacity, and of functional capacity on productivity. In conclusion, adult ill-health restricts development in societies burdened by adult ill-health.
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  10. 10

    Education, externalities, fertility, and economic growth.

    Weale M

    Washington, D.C., World Bank, 1992 Nov. 51 p. (Policy Research Working Paper: Population, Health, and Nutrition No. WPS 1039)

    The author "develops a simulation model...[that] links fertility decisions with consumption/saving decisions....The model is extended to reflect education as an endogenous decision and then further to look at the effects of an external effect of education on economic growth." (EXCERPT)
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  11. 11

    Third World development: perspectives.

    Venkataramanan LS

    In: Strategies for Third World development, edited by John S. Augustine. New Delhi, India, Sage Publications, 1989. 16-33.

    In spite of the many differences in developing countries, all promote policies aimed at improving resource allocations, increasing the value of public and private corporations, preparing domestic savings, locating access for market exports, and supporting investment activities. Poverty and unemployment are indigenous to rural areas in developing countries. Planners' and policymakers' objectives are to promote policies for growth, arrange exports and imports, deal with the interdependence and economic dependence in trade relations, to develop agricultural policies, alleviate poverty and unemployment, and to provide food security. Each task is discussed, e.g., growth policies must balance an appropriate mix of stabilization and structural adjustment. Growth can be accomplished through increased domestic savings, an appropriate rate of monetary growth, a stable exchange rate, and reduced budget deficits. Efficiency of investment can be increased with encouraging private domestic and foreign investment and reducing administrative controls and tax system distortions. Military spending reductions and increased investment in irrigation, drainage, and extension of public services and agricultural support make better use of public savings. Optimizing use of scarce resources of capital and foreign exchange contribute to social and economic improvement. Insulation from the fluctuations in growth trends in other countries reduces vulnerability. Self-reliance is promoted. In coping with inequalities in income distribution, poverty, and unemployment, developing counties have focused on growth in gross national product (GNP). Production and investment need to be reorganized in order to have a wider effect on income distribution and achieve social justice. Employment must be increased for neutral personal tax-subsidy schemes to work. Production planning targeted to the rural poor and geared to consumption planning can help to alleviate hunger and poverty. In balancing production, consumption, and employment, it is important to consider that increasing the level of employment beyond free market equilibrium requires a certain level of subsidy, and increasing the level of distributive consumption may led to lower investment for future growth and employment.
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  12. 12
    Peer Reviewed

    Saving and consumption patterns of the elderly: the German case.

    Borsch-Supan A

    JOURNAL OF POPULATION ECONOMICS. 1992 Nov; 5(4):289-303.

    The paper provides an empirical analysis of saving and consumption choices of the elderly in [the former West] Germany, based on the German income and expenditure surveys 1978 and 1983....The observed age-consumption profiles are very different from those predicted by the pure life-cycle theory. Although wealth is declining between age 60 and 70, it increases again after 70, such that the very old have the highest savings rates among all age groups and accumulate wealth rather than decumulate it. (EXCERPT)
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  13. 13
    Peer Reviewed

    Life cycle savings and consumption constraints: theory, empirical evidence, and fiscal implications.

    Borsch-Supan A; Stahl K


    Recent tests of both the pure and the extended life cycle hypothesis have generated inconclusive results on the life cycle behavior of the elderly. We extend the life cycle model by introducing a constraint on the physical consumption opportunities of the elderly which, if binding, imposes a consumption trajectory declining in age. This explains much of the received evidence on the elderly's consumption and savings behavior, in particular declining consumption, and increasing savings and wealth with increasing age. Our analysis of [Federal Republic of Germany] data gives additional support to our theory. We finally draw the implications of the theory on the incidence of consumption and income (wealth) taxes, and on the recent (inconclusive) tests of intergenerational altruism. (EXCERPT)
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  14. 14

    Consumption, savings and demography.

    Alessie RJ; Kapteyn A

    In: Demographic change and economic development, edited by Alois Wenig and Klaus F. Zimmermann. Berlin, Federal Republic of Germany, Springer-Verlag, 1989. 272-305. (Studies in Contemporary Economics)

    This paper estimates and tests an expected (multi-period) utility maximization model of the joint determination of savings and of expenditures on different goods using panel data. The emphasis is on appropriate modeling of demographic effects (as taste shifters) and on the estimation of within period preferences that are consistent with the intertemporal 2-stage budgeting under uncertainty. The parameters of the intratemporal utility function depend on demographic factors in a flexible way. Certain implications of the rational expectations-life cycle hypothesis are tested along the lines of Hall (1978). The empirical results indicate rejection of the hypothesis and suggest the existence of liquidity constraints. However, for some forms of liquidity constraints, the functional form of the within period demand functions is not affected. Therefore, the authors have estimated a within period demand system, based on the Almost Ideal Demand System cost function. Both the allocation of consumption across the life cycle and the allocation of expenditures within a given period depend heavily on demographics. (author's)
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  15. 15

    Are Americans on a consumption binge? The evidence reconsidered.

    Blecker RA

    Washington, D.C., Economic Policy Institute, 1990. 71 p.

    This report refutes the hypothesis that the private household sector as a whole has been "overconsuming" in recent years. It shows that consumption growth in the US has not been unusually rapid in the 1980s, that the conventional measures which show low savings rates are misleading, and that private investment has not been constrained by a shortfall of savings. The fundamental problem of the American economy in the 1980s was not overconsumption, but underproduction. In the 1980s, only the richest 20% of households experienced a high average growth rate of real consumption spending. The bottom 80% of households had, on average, little or no growth of their real expenditures in the last decade. Most of the increase in the average consumption-gross national product ratio can be explained by higher personal interest income, increased personal wealth (net worth), and cash realizations from sales of equity due to corporate takeovers--all of which are concentrated among the richest households. The overall growth of consumption was no more rapid over the decade of the 1980s than in the previous 3 decades; by some measures it even slowed down. Although aggregate real personal consumption expenditures per capita did grow rapidly in 1985-1988, this rapid growth appears to have been a delayed effort to make up for losses in consumption during the prolonged recessionary period of 1980-1982. Consumption appears excessive relative to national income because national income was depressed in the 1980s. The appearance of low rates of net private saving and investment is mainly due to high rates of economic depreciation of the nation's capital stock, not to a lack of thrift in the private sector. While gross corporate profits were robust in the 1980s, net profits of nonfinancial corporations were squeezed by the combination of high economic depreciation allowances and high net interest payments. The low personal saving rate of 1985-1988 can be explained largely by the fact that the value of wealth rose rapidly in that period, enabling wealthy households to spend more out of current income while still increasing their assets. Since the tax policy changes of the last decade have generally favored the richest 10% of the population, and since this is the only group which has been able to increase its real consumption spending rapidly in the last decade, there is a prima facie case for restoring at least the pre-1980 degree of progressivity of the tax system.
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  16. 16

    Family size, household production, and life cycle saving.

    Davies JB

    ANNALES D'ECONOMIE ET DE STATISTIQUE. 1988 Jan-Mar; (9):141-65.

    Changing family size and labour-leisure choice are introduced into a life cycle model. Saving corresponds with empirical observation in some ways better, and in others worse, as a result. Changing family size reduces aggregate saving and generates substantial dissaving at peak size, indicating that bequests, uncertainty, and liquidity constraints should also be modelled. However, the age profile of consumption is humped, and labour-leisure choice produces a drop in consumption on retirement, both corresponding well with observation. (SUMMARY IN FRE) (EXCERPT)
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  17. 17
    Peer Reviewed

    Age structure and capital dilution effects in neo-classical growth models.

    Blanchet D


    Economists often over estimate capital dilution effects when applying neoclassical growth models which use age structured population and depreciation of capital stock. This occurs because capital stock is improperly characterized. A standard model which assumes a constant depreciation of capital intimates that a population growth rate equal to a negative constant savings ratio is preferable to any higher growth rate. Growth rates which are lower than a negative constant savings ratio suggest an ever growing capital/labor ratio and an ever growing standard of living, even if people do not save. This is suggested because the natural reduction of the capital stock through depreciation is slower than the population decrease which is simply unrealistic. This model overlooks the fact that low or negative growth rates result in an ageing of the capital stock, and this ageing subsequently results in an increase of the overall rate of capital depreciation. In that overly simplistic model, depreciation was assumed independent of the age of the captial stock. Incorporating depreciation as a variable into a model allows a more symmetric treatment of capital. Using models with heterogenous capital, this article explores what occurs when more than 1 kind of capital good is involved in production and when these various captial goods have different lengths of life. Applying economic models, it also examines what occurs when the length of life of capital may vary. These variations correct the negative impact that population growth can have on per capital production and consumption.
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  18. 18

    Japan's dilemma: how to cope with an aging population.

    Molony K

    U.S. LONG-TERM REVIEW. 1988 Winter; 10-5.

    Future demographic trends in Japan are reviewed, with an emphasis on demographic aging. "It is clear the aging of its population will have an impact on Japan's labor practices, saving and consumption patterns, and demand for public and private resources." The author concludes that "given Japan's past experience in adapting to all types of adversity...its response to demographic shifts will likely enable it to continue its remarkable economic growth." (EXCERPT)
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  19. 19

    Social Security as trade among living generations.

    Hansson I; Stuart C

    AMERICAN ECONOMIC REVIEW. 1989 Dec; 79(5):1,182-95.

    We model [U.S.] Social Security that is legislated endogeneously by living generations. Specifically, we consider the effects of Social Security on resource allocation and Pareto optimality, examining which generations gain from Social Security and whether some generations lose. Because saving and transfer decisions are made sequentially in the real world, we use an infinite-horizon, overlapping-generations framework in which life-cycle saving and transfers to the old are determined by living agents. We focus on the case in which agents are altruistic but place sufficiently greater weight on own comsumption than on the consumption of agents in other generations so that, starting from a steady state without Social Security, living agents would gain utility if consumption were shifted marginally to them from later generations. (EXCERPT)
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  20. 20

    World tables, 1988-89 edition: from the data files of the World Bank.

    World Bank

    Baltimore, Maryland, Johns Hopkins University Press, 1989. [iii], 653 p.

    This edition of WORLD TABLES updates the core socioeconomic indicators used by the World Bank and given in the 1987 edition; it adds topical pages and a related explanatory text. It disseminates, with little delay, country estimates used by the Bank in its dialogue about economic and social trends in developing countries, which emphasizes Bank borrowers. Data for industrial market economies are based on reports of the Organisation for Economic Co-operation and Development and the International Monetary Fund. National publications are used for the remaining Bank members. Country time series are also used by the Bank to measure trends in groups of countries. The topical pages cover gross national product per capita, gross national income per capita, private consumption per capita, gross domestic investment per capita, gross national income, gross domestic product (GDP), agriculture's contribution to GDP, industry's contribution to GDP, services' contribution to GDP, total consumption's contribution to GDP, gross domestic investment, gross domestic savings, private consumption, balance of payments, value of merchandise imports, growth of merchandise imports, value of merchandise exports, and growth of merchandise exports.
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  21. 21

    The demographic and social consequences of demographic aging.

    Tabah L

    In: Economic and social implications of population aging: proceedings of the International Symposium on Population Structure and Development, Tokyo, 10-12 September 1987. New York, New York, United Nations, 1988. 121-44. (ST/ESA/SER.R/85.)

    Demographic projections for the majority of the industrial countries show that the proportion of persons of working age (15-59 or 15-64) in the total population will be higher in 2000 than it was in 1980. But after the beginning of the next century, in all the industrial countries except Ireland, there will be a gradual reduction in the proportion of persons of working age. The projections show that the deterioration in the ratio of persons aged 20-59 to those ages 60 and over will be felt gradually at first, owing to the baby boom, but that it will speed up from 2005. According to the majority of experts, the aging of the active population will have the effect of restraining the structural plasticity of the economy by slowing down necessary changes and mobility between sectors, and will produce an increase in wage and non-wage costs. Aging produces a slow decline in the consumption of goods and services associated with childhood and a slow increase in the consumption of certain goods and services connected with advancing age (leisure, health care, dietary products). Demographic aging has an effect on the quality of savings, which will tend to be more cautious and directed more towards prudent investments than towards investments in the modernization of the productive apparatus, which are not immediately profitable and contain risks. With the increase in life expectancy, the age of inheritance is constantly rising. The increasingly late passing-on of legacies does not facilitate the modernization of enterprises. The majority of retirement schemes have not yet reached maturity. Many pensioners have not contributed for the period required for a full pension, especially women. Increasingly, the rich countries are finding that they have a number of economic and social problems in common. In the rich countries, there is universal concern about the structural rigidity which aging creates and exacerbates in production and about the future financial balance of the retirement systems, which are seen to be under serious threat at a time when, paradoxically, the economic, social, and health situation of old people has never been better.
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  22. 22

    Remittances of Indian migrants to the Middle East: an assessment with special reference to migrants from Kerala State.

    Gulati IS; Mody A

    [Unpublished, 1985]. ii, 61 p. (DP/RILM/4.)

    The future course of remittance inflows to India from the Middle East is intimately linked to what happens to the Indian work force in the Middle East. In 1979-1982, the absolute level of outflow fell from 270,000 in 1981 to 225,000 in 1984. Given the prospects, both medium and long term, of world oil prices and oil exports from the Middle East, it is quite likely that the rate of growth of both investments and output in the labor-importing countries of the Middle East will be much slower. The composition of future investments in these countries will also change to more capital intensive industries away from construction. In the next few years there may continue to be some demand for additional labor, but in the longer run workers may return home in large numbers. The demand for construction will slow down, and the demand for services will rise. Which of the labor-exporting countries will be able to respond appropriately to this changing pattern of demand for skills from the Middle East is a question that cannot be easily answered. Labor-exporting countries need flexibility in adjusting their manpower supply to changing patterns of skill demand from the Middle East. The flow of remittances form Indian workers in the Middle East has been substantial. Although the government of India offers a number of incentives for the placement of remittances, the amounts invested in these firms and companies has never added up to more than 1/5 of any year's total remittances. Individual migrant workers have priorities of their own to follow. No amount of inducement for other forms of investment can easily deflect a migrant from his preference for land. Incentive measures may have to be made much more effective and wide ranging.
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  23. 23

    The impact of population ageing on the social security expenditure and economic growth in Japan.

    Maruo N


    The author considers the impact of demographic aging in Japan on the social security system and on economic growth. It is argued that "First of all, as the cost of social security (including social services) increases remarkably at the earlier stage of ageing, the disposable (after tax) income and private consumption of the present labour force generation tend to increase at a lower growth rate than that of the GNP....Secondly if pension systems are based on terminal funding schemes, the ageing of the population increases savings (net increase of the amount of the pension funds) at the earlier stage of the ageing of the population. Thirdly, there is a time lag between the increase of social security benefits and the decrease in the personal savings ratio. The high ratio of savings and the shortage of aggregate demand as well as the high pressure for export in...recent Japan can partly be attributed to the above factors." Possible future economic scenarios as demographic ageing in Japan proceeds are described, and policies to avert anticipated problems are outlined. (SUMMARY IN JPN) (EXCERPT)
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  24. 24

    [Effects of demographic factors on household consumption patterns in Taiwan].

    Wang C

    Taipei, Taiwan, Academia Sinica, Institute of Economics, 1987 Dec. viii, 125 p. (Studies of Modern Economy Series No. 10)

    Household consumption patterns in Taiwan during the period 1964-1981 are analyzed, with an emphasis on the impact of demographic variables on household consumption choices. An economic model is used to show that "demographic factors play a key role in the household decision making of consumption and saving and that household demographic variables have great effects on the magnitudes and structures of commodities consumed. The estimated values of demographic scaling parameters indicate that there exists [an] economy of scale of family size in consumer expenditure....The scale effects of commodities in 1981 in general were lower than these in 1964." Comparisons are made with trends in the United Kingdom, the United States, and South Korea. (SUMMARY IN ENG) (EXCERPT)
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  25. 25

    Demographic trends and saving propensities: "a revisit with life cycle theory"..

    Owens EW

    ATLANTIC ECONOMIC JOURNAL. 1986 Dec; 14(4):106.

    This paper uses the life cycle hypothesis to explain why personal savings in the U.S. have fallen to a low of 1.9% of disposable income in 1985, despite tax cuts. Life cycle theory envisions an individual's lifetime as a series of choices of current consumption and allocation of net worth between alternative assets and liabilities so as to maximize the expected utility of consumption over life. The mathematical expression for the utility function implies the stochastic nature of future return on aessts and independence at any given age of the ratio of consumption to resources to total resources. Population growth leads to positive saving overall by increasing the ratio of younger households. The proportion of younger households (ages 25-44) in the U.S. population increased by 10.3 million from 1980-1985, and this growth is expected to continue. Older households increased their savings, but younger families are borrowing more and spending the money their elders saved.
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