The Baby Boom Generation and the Economy

The Baby Boom Generation and the Economy

The Baby Boom Generation and the Economy

The Baby Boom Generation and the Economy

Excerpt

Probably no one born during the baby boom that extended from just after World War II to the early 1960s is unaware of belonging to a special generation. Many parents and teachers remember the challenge of educating what was to be the brightest and best-educated generation ever—and what was certainly the largest. That shining promise did not last into the 1970s. Indeed, as economic difficulties persisted through the decade, some observers suggested that the baby boom generation was in large part to blame, arguing that as its members crowded into the labor and housing markets, they pushed unemployment up, slowed the growth in real wages, and sent house prices spiraling.

This study examines the economic record, from the educational system to the labor market, the housing market, and the social security system, to determine whether the baby boom generation has been a major driving force behind the economy. The author concludes that it has not been. In some areas—saving, for example—the generation appears to have had little or no effect. In others, such as housing, careful investigation shows that the baby boom generation has been only one of several forces tending in the same direction, and that it has not dominated the outcome. Thus the existence of the baby boom generation tells us very little about the future course of the economy. By the same token, it is clear that the generation does not create its own bad times wherever it goes. The nation's economic problems largely stem from other causes.

The author is grateful to Michael S. McPherson, Alicia H. Munnell, Harvey S. Rosen, and Walter S. Salant, who read the entire manuscript and provided detailed comments. Comments on parts of the manuscript were provided by Henry J. Aaron, David W. Breneman, Edward F. Denison, Anthony Downs, Paul O. Flaim, Richard Goode, Clifford S. Russell, and Wayne Vroman. Ørjar Øyen and V. Jeffery Evans offered helpful suggestions in conversations with the author.

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