The Aging Hypothesis; Gauti Eggertsson (Brown University)

Abstract

This paper proposes the aging hypothesis: That the rapid aging of the population offers a unified explanation for three major macroeconomics trends characterizing advanced economies for the past 50 years: the rise of firm monopoly power, the increase in income inequality and the fall in interest rates. We also show that the aging hypothesis can account for closely related developments, such as the observed fall in the labor share, the fall in firm entry, and the reduction in productivity growth.