Demographic Changes and Regional Economy: Simulation Results From the Chicago CGE Model
Park, Seryoung
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Permalink
https://hdl.handle.net/2142/85581
Description
Title
Demographic Changes and Regional Economy: Simulation Results From the Chicago CGE Model
Author(s)
Park, Seryoung
Issue Date
2007
Doctoral Committee Chair(s)
Hewings, Geoffrey J.D.
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Gerontology
Language
eng
Abstract
This paper analyzes the impact of demographic changes on a regional economy, a process whose impact will become more important over the next a few decades. Specifically, this study quantifies the effect of an aging population and retirement migration focusing on Chicago regional economy in terms of its impact on economic growth, income (asset) distribution, and welfare. For this purpose, this paper uses a two-region computable general equilibrium (CGE) model, combined with an overlapping generations (OLG) framework. The first finding is that the aging population has significant negative impacts on Chicago economy, which are quite similar to the results found in the previous studies at the national level. However, the policy responses yield the quite different effects on Chicago economy compared to rest of the U.S. In particular, more local immigrants than national average only increases the income disparity without increasing benefit. This study also suggests that, under aging population, the larger immigrants and more generous pension benefit do not necessarily result in more desirable results, while an increase in retirement age turns out to monotonically improve the average welfare. In addition, the ongoing retirement out-migration of Chicago region hurts the local economy, which becomes stronger under aging population, while rest of the U.S. benefit from this flow.
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