The “graying of America” will substantially increase the fraction of the populat
ID: 1251101 • Letter: T
Question
The “graying of America” will substantially increase the fraction of the population that is retired in the decades to come. To illustrate the implications for U.S. living standards, suppose that over the 44 years following 2006 the share of the population that is working returns to its 1960 level, while average labor productivity increases by as much as it did during 1960–2006. Under this scenario, what would be the net change in real GDP per person between 2006 and 2052? The following data will be useful:
Average labor productivity Share of population employed
1960 $48,216 36.4%
2006 $88,204 48.1%
Explanation / Answer
1960 ALP $48216 Share of population 36.40% 2006 ALP $88204 Share of population 48.10% Increase in Productivity $39988 2052 ALP $128192 Share of Population 36.40% From 1960 to 2006 increase in Avg labor productivity(ALP) is $88204 - $48216= $39998 In 2052 the ALP increasd by same amount from 2006, So ALP in 2052 = $88204+$39998 = $128192 Change in ALP = (128192- 88204)/ 88204 = 39998/88204 = 45% Change in labor share of employemnt = 48 % in 2006 to 36.4% in 2052 = - 11.07% Percapita change in Real GDP = Change in ALP + Change in labor employemnt = 45% - 11.07% = 33.63% 1960 ALP $48216 Share of population 36.40% 2006 ALP $88204 Share of population 48.10% Increase in Productivity $39988 2052 ALP $128192 Share of Population 36.40%Related Questions
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