AccScience Publishing / IJPS / Online First / DOI: 10.36922/ijps.3645
RESEARCH ARTICLE

 Demographic changes, technology growth, and retirement policy reform: Implications for U.S. housing dynamics

Chao Li1 Han Chang2*
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1 Department of Insurance, School of Insurance, Shandong University of Finance and Economics, Shandong Province, China
2 Department of Finance, Business School, Soochow University, Suzhou, Jiangsu Province, China
Submitted: 13 May 2024 | Accepted: 21 October 2024 | Published: 6 November 2024
© 2024 by the Author(s). This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution 4.0 International License ( https://creativecommons.org/licenses/by/4.0/ )
Abstract

As the population aging process continues, concerns about how this situation impacts the housing market and social security rise. To address this question, this paper presents a developed and calibrated general equilibrium life-cycle model incorporating two production sectors to analyze the impacts of demographic structure changes and retirement policy reforms on housing price fluctuations and household choices. The model calibrated to the U.S. macroeconomic data between 1968 and 2018 suggests that in an economy with unlimited land supply, the housing supply curve exhibits perfect elasticity, rendering demographic changes insignificant in housing price fluctuations, while technological advancements lead to decreased prices. A 1% growth in productivity in both sectors results in a 2.6% decrease in house prices. Furthermore, a 1% decrease in population and a 5-year early retirement led to significant reductions of 25% and 30% in individual social security payments and 9% and 18% in interest rates, respectively. This suggests that during a recession caused by demographic structural changes, households become more conservative and prioritize precautionary saving strategies, increasing savings and investing more in housing assets. Consistent with empirical findings, during an economic boom, a decline in the capital-output ratio and the real housing price suggests a decrease in savings and housing asset investment. The rise in consumption drives the capital demand of the non-housing sector to increase, stimulating business expansion and labor inflow.

Keywords
Demographic structure
Lifecycle model
Retirement policy
Housing market
Funding
This work was supported by the Postgraduate Research and Practice Innovation Program of Jiangsu Province (KYCX24_3354).
Conflict of interest
The authors declare that they have no competing interests.
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International Journal of Population Studies, Electronic ISSN: 2424-8606 Print ISSN: 2424-8150, Published by AccScience Publishing