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Does demographic change matter for growth?

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  • Liao, Pei-Ju

Abstract

How important is the demographic transition for economic growth? To answer this question, this paper constructs a general equilibrium overlapping generations model with endogenous fertility. The model is calibrated to data from Taiwan, a country that experienced rapid economic growth while undergoing significant demographic transition. Our results suggest that more than one-third of the output growth in Taiwan during the past four decades can be attributed to demographic transition, while TFP growth explains another third and the remainder is mainly due to skill-biased technological progress. Our results show that demographic change is an important driver of the growth process in countries undergoing rapid fertility decline.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 55 (2011)
Issue (Month): 5 (June)
Pages: 659-677

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Handle: RePEc:eee:eecrev:v:55:y:2011:i:5:p:659-677

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Keywords: Growth Demographic transition Endogenous fertility;

References

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Cited by:
  1. Vogel, Edgar & Ludwig, Alexander & Börsch-Supan, Axel, 2013. "Aging and Pension Reform: Extending the Retirement Age and Human Capital Formation," MEA discussion paper series 12257, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  2. Kunze, Lars, 2014. "Life expectancy and economic growth," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 54-65.
  3. Dimitrios Varvarigos & Intan Zanariah Zakaria, 2011. "Growth and Demographic Change: Do Environmental Factors Matter?," Discussion Papers in Economics 11/46, Department of Economics, University of Leicester.

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