Page 53 - IJPS-11-1

International Journal of

Population Studies

RESEARCH ARTICLE
Demographic changes, technology growth, and

retirement policy reform: Implications for U.S.
housing dynamics

Chao Li 1 and Han Cang *
2
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

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
*Corresponding author:
Han Cang prices. A 1% growth in productivity in both sectors results in a 2.6% decrease in
(hcang@stu.suda.edu.cn) 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
Citation: Li C. & Cang H. (2025).
Demographic changes, technology and 9% and 18% in interest rates, respectively. This suggests that during a recession
growth, and retirement policy caused by demographic structural changes, households become more conservative
reform: Implications for U.S. and prioritize precautionary saving strategies, increasing savings and investing more
housing dynamics. International
Journal of Population Studies, in housing assets. Consistent with empirical findings, during an economic boom, a
11(1): 47-60. decline in the capital-output ratio and the real housing price suggests a decrease
https://doi.org/10.36922/ijps.3645 in savings and housing asset investment. The rise in consumption drives the capital
Received: May 13, 2024 demand of the non-housing sector to increase, stimulating business expansion and
Revised: August 30, 2024 labor inflow.
Accepted: October 21, 2024
Keywords: Demographic structure; Lifecycle model; Retirement policy; Housing market
Published Online: November 6,
2024
Copyright: © 2024 Author(s).
This is an Open-Access article
distributed under the terms of the 1. Introduction
Creative Commons Attribution
License, permitting distribution, For many households, real estate assets and social security significantly influence their
and reproduction in any medium, consumption and saving decisions throughout their life cycles. At present, as housing
provided the original work is
properly cited. costs continue to soar, securing a comfortable dwelling has become an immense financial
burden for younger generations. According to the report on housing asset distribution
Publisher’s Note: AccScience
Publishing remains neutral with issued by the Organization for Economic Cooperation and Development (OECD),
regard to jurisdictional claims in housing wealth accounts for around 50% of total household wealth on average across
published maps and institutional
affiliations. the 29 OECD countries in 2019, with over 40% of total wealth in the United Kingdom

Volume 11 Issue 1 (2025) 47 https://doi.org/10.36922/ijps.3645