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Population Aging and the Changing Composition of Consumption Demand

By Melanie Lührmann, Mea Universität Mannheim and Classification J


This paper analyzes how population aging affects the aggregate West German structure of consumption demand until 2040. Since the composition of individual consumption demand varies over the life cycle, the aggregate demand structure is likely to change in the course of population aging. I estimate the age-specific household demand for a set of eight composite goods using a quadratic almost ideal demand system model. In the second part of the paper, the microeconometric estimates of life cycle demand patterns are aggregated and projected until 2040. The projections are done in several scenarios incorporating the direct effect of population aging and accompanying effects like changes in the distribution of spending power. The results point to significant increases in the expenditure shares of housing and leisure goods and a decline in necessities like food and clothing

Topics: Demand analysis, Consumption, Population aging. JEL
Year: 2004
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