Question

The "graying of America" will substantially increase the fraction of the popu-- lation that is retired in the decades to come. To illustrate the implications for U.S. living standards, suppose that over the 46 years following 2006 the share of the population that is working returns to its 1960 level, while average labor productivity increases by as much as it did during 1960-2006. Under this sce- nario, what would be the net change in real GDP per person between 2006 and 2052? The following data will be uscful: 1960 Average labor productivity $44,216 $88,204 Share of population employed 36.4% 48.1% 2006

Answer 1

Here,

	Average Labor Productivity	Share of Population Employed
1960	44216	36.40%
2006	88204	48.10%
Growth	99.48%

Now Share of population employed in 2052 = 36.4%

Average LAbor Productivity = 88204*(1+99.48%) = $175953.17

Now percapita GDP in 2006 = 88206*48.1/100 = 42426.12

Now percapita GDP in 2052 = 175953.17*36.4/100 = 64046.96

Net Change in GDP per person = 50.96%