Incentives and product variety in an aging economy

This paper presents a new method to clarify intergenerational effects of th e demographic change in industrialized countries, i.e., the trend of aging. Recognized effects of aging are twofold; a disincentive effect and a produ ct variety effect. The results are consistent with the empirical findings i n Cutler et al. (1990). With the evidence, our model predicts that "diminis hed fertility represents a problem rather than an opportunity," and that "d iminished mortality represents an opportunity rather than a problem".