Jensen, Svend E. HougaardJorgensen, Ole Hagen2012-03-192012-03-192010-11-01https://hdl.handle.net/10986/3952Using a stochastic general equilibrium model with overlapping generations, this paper studies (i) the effects on both extensive and intensive labor supply responses to changes in fertility rates, and (ii) the potential of a retirement reform to mitigate the effects of fertility changes on labor supply. In order to neutralize the effects on effective labor supply of a fertility decline, a retirement reform, designed to increase labor supply at the extensive margin, is found to simultaneously reduce labor supply at the intensive margin. This backlash to retirement reform requires the statutory retirement age to increase more than proportionally to fertility changes in order to compensate for endogenous responses of the intensity of labor supply. The robustness of this result is checked against alternative model specifications and calibrations relevant to an economic region such as Europe.CC BY 3.0 IGOAGE COMPOSITIONAGGREGATE INCOMEALLOCATION OF RESOURCESBABIESBABYBABY BOOMBUSINESS CYCLECAPITAL INVESTMENTCHANGES IN FERTILITYCONSUMPTION INCREASESCONTRIBUTION RATEDEBTDECLINE IN FERTILITYDEMOGRAPHIC TRENDSDEPENDENCY RATIOSDISCOUNT RATEDOWNWARD PRESSUREEARLY RETIREMENTECONOMIC DECISIONSECONOMIC GROWTHECONOMIC IMPLICATIONSECONOMIC THEORYECONOMICSELASTICITYELASTICITY OF SUBSTITUTIONELDERLYENDOGENOUS VARIABLESEXOGENOUS VARIABLEFERTILITYFERTILITY DECLINEFERTILITY RATEFERTILITY RATESFINANCIAL MARKETSFISCAL POLICYFUTURE RESEARCHGENERAL EQUILIBRIUMGLOBAL POPULATIONGROSS RETURNGROWTH RATEHUMAN CAPITALIMPERFECT COMPETITIONINCOMEINDEXATIONINNOVATIONSINTERNATIONAL MOBILITYLABOR ECONOMICSLABOR MARKETLABOR SUPPLYLABOURLABOUR FORCELABOUR FORCESLABOUR MARKETLABOUR SUPPLYLONGEVITY ADJUSTMENTLOW FERTILITYLOWER FERTILITYMARKET EQUILIBRIUMMONETARY POLICYNUMBER OF CHILDRENNUMBER OF WORKERSOPPORTUNITY COSTOPTIMIZATIONOVERLAPPING GENERATIONS MODELPAYROLL TAXPENSIONPENSION CONTRIBUTIONPENSION CONTRIBUTIONSPENSION REFORMPENSION SYSTEMPENSION SYSTEMSPOLICY MAKERSPOLICY RESEARCHPOLICY RESEARCH WORKING PAPERPOLITICAL ECONOMYPOPULATION DYNAMICSPOPULATION GROWTHPOPULATION GROWTH RATEPRODUCTIVITYPROGRESSRATE OF GROWTHREAL WAGESREPLACEMENT RATERESPECTRETIREESRETIREMENTRETIREMENT AGERETIREMENT PERIODRETIREMENT PERIODSRETIREMENT POLICYRETIREMENT SAVINGSSOCIAL SECURITYSOCIAL SECURITY REFORMSURVIVAL PROBABILITIESTAX RATETAXATIONUTILITY FUNCTIONWAGE RATEWAGESWEALTHWORKERWORKERSWORKING HOURSWorld Bank10.1596/1813-9450-5470