The effects of the changing U.S. age distribution on owious macroewnomic equations are examined in this paper. The equations include consumption, housing-investment, money-demand, and labor-force-participation equations. There seems to be enough variance in the age-di-utribution data to allow reasonably precise estimates qf the effects of the age distribution on the macro variables. (JEL 131) A striking feature of postwar U.S. society has been the baby boom of the late 1940’s and the 1950’s and the subsequent falling off of the birth rate in the 1960’s. Figure 1 shows a plot of the number of births by year for the period 1900-1986. The number of births rose dramatically from 2.5 million in 1945 to 4.2 million in 1961 and then fell back to 3.1 million in 1974. Figure 2 shows the consequences of this birth pattern for the percentage of prime-age (25-54) people in the working-age (2 16) population. In 1952 this percentage was 57.9, whereas by 1977 it had fallen to 49.5. Since 1980 the percentage of prime-aged workers has risen sharply as the baby boomers have begun to pass the age of 25. In this paper, we examine the effects of the dramatic changes in the U.S. population age distribution on the behavior of several macroeconomic variables. Previous empiri-cal studies of aggregate behavior have ty-pically ignored age-distribution effects, rely-ing instead on the representative-agent paradigm. While this approach is attractive in that it derives macroeconomic relation-ships from a well-specified individual’s opti-mizing problem, it explicitly assumes that the population is homogeneous. Thomas M.

Evidence collected using the Panel Study of Income Dynamics (PSID) indicates that labor supply, saving, and marital decisions are strongly linked. This paper has two main goals. The first is to develop a model of household behavior that captures the empirical features of labor supply, saving, and marital choices. The second goal is to simulate the model using the PSID. The results indicates that the proposed model can match most of the features displayed by the data. They also suggest that the relationships between labor supply, saving, and marital status decision are important features of household behavior that should be considered by economists and policy makers when designing and implementing policies formulated to change the welfare of household members. We are deeply indebted to Lucas Davis for initial collaboration on this project. We are also very grateful to

This article describes the current state of economic theory intended to explain the unequal distribution of wealth among U.S. households. The models reviewed are heterogeneous agent versions of standard neoclassical growth models with uninsurable idiosyncratic shocks to earnings. The models endogenously generate differences in asset holdings as a result of the household's desire to smooth consumption while earnings fluctuate. Both of the dominant types of models---dynastic and life cycle models---reproduce the U.S. wealth distribution poorly. The article describes several features recently proposed as additions to the theory based on changes in earnings, including business ownership, higher rates of return on high asset levels, random capital gains, government programs to guarantee a minimum level of consumption, and changes in health and marital status. None of these features has been fully analyzed yet, but they all seem to have potential to move the models in the right d...

Between the sixties and the late eighties the percentages of low-saving single parent households and people living alone have grown dramatically (from 5.7% to 12.0% and from 18.1% to 28.3%, respectively) at the expense of high-saving married households, while the household saving rate has declined equally dramatically (from 8.95% to 4.17%). This seems to indicate that about half of the decline in savings is due to demographic change. We construct a model with agents changing marital status, but where the saving behavior of the households can adjust to the properties of the demographic process. We find that the demographic changes that reduce the number of married households (mainly higer divorce and higher illegitimacy) induce all household types to save more and that the e#ect on the aggregate saving rate is minuscule. We conclude that the drop in savings in the late eighties is not due to changes in household composition. # We thank Albert Ando, Juan Pablo Cordoba, Hal Cole, Gary Hansen, Tim Kehoe, Lee Ohanian, Edward Prescott, and numerous seminar participants for helpful comments. We also thank Juan Pablo Cordoba and Vincenzo Quadrini for help with data analysis. Cubeddu thanks the Boettner Institute for financial support, Ros-Rull thanks the National Science Foundation for Grant SBR-9309514. The views expressed herein are those of the authors and not necessarily those of the Federal Reserve Bank of Minneapolis, the Federal Reserve System, or the International Monetary Fund. 1

American divorce rates rose from the 1950s to the 1970s, peaked around 1980, and have fallen ever since. The mean age at marriage also substantially increased after

This paper finds a strong positive correlation between female labor force participation and negative health outcomes for middle-aged men and women, and suggests that this correlation is mediated by household-level stress. At the crosscountry aggregate level, I show that labor force participation of women is associated with increased mortality rates among both men and women. At the individual level, I find that married men whose spouses work are more likely to die within 10 years, to have high blood pressure and to self-report worse health outcomes. The findings do not appear to be the result of reverse causality. The mortality effects, both aggregate and individual, are especially large for deaths from ischemic heart disease, while weak to moderate for cancer. These findings match well with the medical evidence on the link between stress and health.

Between the sixties and the late eighties the percentages of low-saving single-parent households and people living alone have grown dramatically (from 5.7% to 12.0% and from 18.1% to 28.3%, respectively) at the expense of high-saving married households, while the household saving rate has declined equally dramatically (from 8.95% to 4.17%). A preliminary analysis of population composition and savings by household type seems to indicate that about half of the decline in savings is due to demographic change. We construct a model with agents changing marital status, but where the saving behavior of the households can adjust to the properties of the demographic process. We find that the demographic changes that reduce the number of married households (mainly higher divorce and higher illegitimacy) induce all household types to save more and that the effect on the aggregate saving rate is minuscule. We conclude that the drop in savings since the sixites is not due to changes in household co...

this paper was presented at the SEA meetings in November 2000. We are grateful to the participants for useful feedback

Preliminary–please do not cite without permission In the US, women tend to have lower levels of financial literacy than men. This is consistent with a household division of labor in which men manage finances. However, women also tend to outlive their husbands, so they will eventually need to take over this task. Using a new survey of older couples, I find that women acquire additional financial literacy as they approach widowhood. At an estimated increase of 0.04 standard deviations per year approaching widowhood, 80 % of women in my sample would catch up with their husbands prior to the expected onset of widowhood. I also demonstrate that these findings are due to actual increases by women and are not merely an artifact of cognitive decline among older men. These results are consistent with a model in which the household division of labor breaks down when a spouse dies. The model shows that women have an incentive both to delay acquiring financial knowledge and also to begin learning before widowhood. This paper represents the first empirical examination of the financial literacy of both membersofcouplesandprovidesalife-cycleinterpretationofthegendergapinfinancial literacy. This paper employs data that is generously supported by NIA grant P01 AG026571. Many thanks to

The relationship between increasing women’s earnings and rising divorce rates frequently has been explained by the so-called independence effect: If a wife enjoys a higher earning than her husband does, she gains less from marriage. It has also been argued that in a society with egalitarian gender attitudes this effect is less important. In this paper, we test if the independence effect applies to Sweden, a country in which egalitarian gender views dominate and female labour-force participation and divorce rates are high. Our analysis is based on a large register data set and intensity regression models. We found support for the ‘independence effect’: The relationship between the share of a wife’s income and the divorce risk is positive regardless of the couple’s total income and the wife’s education level.