Suppose in our model, lifespans increased due to a productivity in- crease. What would likely happen to hours worked and leisure over the lifetime of a representative consumer.(a)  Let’s consider one of two common ways of implementing this change. Suppose the increase raised both lifespans and the amount of years consumers are healthy enough to work by the same amount, how would that likely affect the measured numbered of hours work by prime aged adults within a given year? What would likely hap- pen to the retirement age?(b)  Let’s consider the other way to implement it. Suppose the change in lifetimes came about changes in technology that delayed death but did not extend the amount of years consumers are healthy enough to work. What would likely happen to hours worked within a year? What would happen to the retirement age?(c)  In the US, the generalized stylized fact is that the actual age of retirement is not increasing. Nor are hours worked per week. Why are both of the above predictions likely off? That is, what is our current model missing?

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Asked Dec 9, 2019
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  1. Suppose in our model, lifespans increased due to a productivity in- crease. What would likely happen to hours worked and leisure over the lifetime of a representative consumer.

    1. (a)  Let’s consider one of two common ways of implementing this change. Suppose the increase raised both lifespans and the amount of years consumers are healthy enough to work by the same amount, how would that likely affect the measured numbered of hours work by prime aged adults within a given year? What would likely hap- pen to the retirement age?

    2. (b)  Let’s consider the other way to implement it. Suppose the change in lifetimes came about changes in technology that delayed death but did not extend the amount of years consumers are healthy enough to work. What would likely happen to hours worked within a year? What would happen to the retirement age?

    3. (c)  In the US, the generalized stylized fact is that the actual age of retirement is not increasing. Nor are hours worked per week. Why are both of the above predictions likely off? That is, what is our current model missing?

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Expert Answer

Step 1

a.

The change in the technology when leads to an increase in the lifespan as well as the amount of years that the consumers are healthy enough to work the same amount, it would impact by increasing the work hours of the labors. The labors will have more periods in front of them to work in the economy and make money which means that they will have more chances to make money which can be used for their expenditure after the period in which they are not able to work. Thus, the prime aged workers would take more hours of work since the increased lifespan has maintained their health which helps the prime aged people to work by the same amount. This would increase the retirement age probably.

Step 2

b.
The advancement of the technology when only prolongs the period of death of the individuals and not maintains their health means that the prime aged individuals will not be having the capabilities to work in the economy. This means that they will have to live more years without the energy to work and earn. This has its impac...

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