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International trade with pensions and demographic shocks

Published online by Cambridge University Press:  24 August 2017

IGOR FEDOTENKOV
Affiliation:
International Research Laboratory for Institutional Analysis of Economic Reforms, CInSt, National Research University Higher School of Economics, and Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia (e-mail: i.fedotenkov@gmail.com)
BAS VAN GROEZEN
Affiliation:
Department of Economics and Network for Studies on Pensions, Aging and Retirement (Netspar), Tilburg University, PO Box 90153, 5000 LE Tilburg, Netherlands
LEX MEIJDAM
Affiliation:
Department of Economics and Network for Studies on Pensions, Aging and Retirement (Netspar), Tilburg University, PO Box 90153, 5000 LE Tilburg, Netherlands

Abstract

The central question of this paper is how international trade and specialization are affected by different designs of pension schemes and asymmetric demographic changes. In a model with two goods, two countries and two production factors, we find that countries with a relatively large unfunded pension scheme will specialize in the production of labour intensive goods. If these countries are hit by a negative demographic shock, this specialization will intensify in the long run. Eventually, these countries may even completely specialize in the production of those goods. The effects spill over to other countries, which will move away from complete specialization in capital intensive goods as the relative size of their labour intensive goods sector will also increase.

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Article
Copyright
Copyright © Cambridge University Press 2017 

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Footnotes

We thank the participants of the Tilburg-Nagoya workshop on Population Economics and two anonymous referees for their useful comments.

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