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Davoine Thomas

Main skills

Public economics

Main contract

EHL Hospitality Business School
Route de Berne 301, 1000 Lausanne 25, Switzerland, CH

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2023

The joint macroeconomic impacts of capital markets integration and fertility

Scientific paper ArODES

Thomas Davoine

Review of international economics, 31, 2, pp. 687-720

Link to the publication

Summary:

Population aging puts pressure on the financing of pension systems in many developed economies over the long run. Higher fertility would reduce the speed at which a population ages, and thus ease the financing pressure. The positive fiscal externality of childbearing decisions is well known in a single-country context. I perform a quantitative investigation of this externality in a multi-country context, to investigate the role of capital markets integration. On a sample of 14 European countries confronted with population aging, I find with simulations that the fiscal gains from a 70-years increase in fertility are on average 1.3 larger with integrated capital markets than with separated capital markets in 50 years, while the GDP per capita gains are 5.0 larger. Positive fertility shocks indeed depress the capital-labor ratio, increase the interest rate and thus attract foreign investors, when capital markets are open. Fertility increases and capital markets integration are however not sufficient to deal fully with the public finance challenge generated by population aging. More reforms are needed.

2021

The long run influence of pension systems on the current account

Scientific paper

Davoine Thomas

Journal of Pension Economics and Finance, 2021

Link to the publication

2016

Cross-country differences in the contribution of future migration to old-age financing

Scientific paper

Davoine Thomas, Johannes Berger, Philip Schuster, Ludwig Strohner

International Tax and Public Finance, 2016

Link to the publication

2023

Redistribution contracts, public investments and cross-country transfers

Conference ArODES

Thomas Davoine

Proceedings of the Annual Congress of the Swiss Society of Economics and Statistics (SSES)

Link to the conference

Summary:

Cross-country transfers are made for multiple reasons, economic or not. There are a few theoretical justifications based on economic efficiency gains. I provide a new motivation, where tax-financed public investments are freed from social con- cerns over redistribution between generations, which can lead to efficiency gains. For public investment projects with twice larger expected returns than the aver- age, my simulations with 14 European countries show that GDP per capita gains at the aggregate level would be nearly twice smaller if cross-country transfers by high-income countries would be used for domestic investments, rather than entirely dedicated to finance public investments by low-income countries.

2022

Redistribution, efficiency and cross-country transfers within the European Union

Conference ArODES

Thomas Davoine

Proceedings of the 78th Annual Congress of the International Institute of Public Finance (IIPF), 2022

Link to the conference

Summary:

There exist few theoretical justifications for cross-country transfers within the European Union based on aggregate economic gains. I provide a new motivation, where tax-financed public investments are freed from concerns over redistribution between generations. For public investment projects with twice larger expected returns than the average, my simulations show that the Union-wide GDP per capita gains would be nearly twice smaller if cross-country transfers by high-income countries would be used for domestic investments, rather than entirely dedicated to finance public investments by low-income countries.

The joint macroeconomic impacts of capital markets integration and fertility over the long run

Conference ArODES

Thomas Davoine

Proceedings of the 37th Meeting of the European Economic Association (EEA), 2022

Link to the conference

Summary:

Population aging puts pressure on the financing of pension systems in many developed eonomies. Higher fertility would reduce the speed at which a population ages, and thus ease the financing pressure. The positive fiscal externality of childbearing decisions is well known in a single-country context. I perform a quantitative investigation of this externality in a multi-country context, to investigate the role of capital markets integration. On a sample of 14 European countries confronted with population aging, I find with simulations that the fiscal gains from an increase in fertility are on average 1.3 larger with integrated capital markets than with separated capital markets in 50 years, while the GDP per capita gains are 5.0 larger. Positive fertility shocks indeed depress the capital-labor ratio, increase the interest rate and thus attract foreign investors, when capital markets are open. As an example of policy implication, the plans for further integration of capital markets in the European Union provide an additional motivation for public policies designed to promote fertility in this region of the world, and vice-versa.

Cross-country differences in the long-run economic impacts of increased fertility

Conference ArODES

Thomas Davoine

Proceedings of the 78th Annual Congress of the International Institute of Public Finance (IIPF), 2022

Link to the conference

Summary:

Higher fertility slowly increases the workers-to-retirees ratio over the long run, which can ease the pension financing challenge brought about by population aging. It may or may not increase production per capita. Existing simulation studies all find a positive impact on public finances over the long run. They however differ on the impact on output per capita. Whether differences are due to model designs or country characteristics is unknown. Using the same macroeconomic model fora sample of 14 European countries, I find that the long-run pension deficits are reduced 27% on average, if one woman out of five had one more child in her lifetime. Variations across countries are small. On the other hand, I find that output per capita increases in all countries from my sample, with one exception. Differences in population structures, age-productivity profiles and pension systems can explain the exception. Fertility-promoting policies will always ease the public finance challenge due to population aging, but may worsen output per capita if pension payments are too loosely connected to earnings histories or if age-productivity profiles are very steep.

Ageing, education and skill-dependent labour supply elasticities

Conference ArODES

Thomas Davoine

Proceedings of the Annual Congress of the Swiss Society of Economics and Statistics (SSES), 2022

Link to the conference

Summary:

Population ageing puts pressure on the financing of social security systems. Incentives for human capital accumulation can however mitigate the negative macroeconomic impacts of population ageing. I add a new component to existing analyses, differences in labour supply elasticities across education classes. Assuming that learning ability and labour supply elasticities are independent, I show that population ageing depresses education incentives. Using an overlapping-generations model calibrated for Germany, I find that population ageing and associated social security reforms reduce the fraction of the population with higher education from 21.4% today to 18.8% in 2060. Such a drop in education requires government to generate an additional 1.3% of GDP of tax revenue to finance age-related social security expenditures. Removing skill biases in labour market regulation leads to more favourable impacts of population ageing on education incentives.

Achievements

PEOPLE@HES-SO
Directory and Skills inventory

Davoine Thomas

Main skills

Economie

Public economics

PEOPLE@HES-SO Directory and Skills inventory

Davoine Thomas

Main skills

Economie

Public economics

PEOPLE@HES-SO
Directory and Skills inventory