In the decades to come, there will be a slowing of

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How Slower Growth in the Labor Force Could Affect the Return on Capital

Our Price: $10.00

By Douglas W. Elmendorf (fr); Ben Page (au)
Year: 2009
Pages: 10
Binding Paperback

Product Code: 1437923992

Description

In the decades to come, there will be a slowing of the rate of growth of the labor force. Although slower growth in the workforce might affect the U.S. economy in many ways, this report focuses on what could happen in just one area: the rate of return paid on assets such as stocks and bonds. A number of theoretical models and simulations suggest that slower growth in the supply of labor could lead to lower rates of return, although that effect could be offset by rising budget deficits, capital outflows, or other factors. A decline in rates of return could have a significant effect on the federal budget through its impact on interest payments. In addition, a shift in the rate of return (and related shifts in wages) would alter the long-term outlook for the Social Security program.

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