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Dilution effects, population growth and economic growth under human capital accumulation and endogenous technological change

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  • Bucci, Alberto
  • Eraydın, Levent
  • Müller, Moritz

Abstract

This paper answers the following two questions: (1) In the data, do we find a dilution effect of population growth also on per-capita human capital investment? If yes, (2) How can we use this observation to explain theoretically the existence of a differential impact of population change on economic growth across countries? In the first part of the article we document empirically considerable cross-country heterogeneity of a dilution effect of population growth with regards to the process of per-capita human capital formation. And we observe that, depending on the dilution effect observed in a given country, population growth may be relevant — either positively or negatively — for economic growth. In the second part of the paper we use these results to build a multi-sector growth model which, by allowing for a country specific dilution effect of population growth on per-capita human capital formation, is capable of accounting for the non-monotonous correlation between demographic and economic growth rates in the long-run.

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  • Bucci, Alberto & Eraydın, Levent & Müller, Moritz, 2019. "Dilution effects, population growth and economic growth under human capital accumulation and endogenous technological change," Journal of Macroeconomics, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:jmacro:v:62:y:2019:i:c:s0164070417305785
    DOI: 10.1016/j.jmacro.2018.08.003
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    2. Ziesemer, Thomas, 2019. "Can we have growth when population is stagnant? Testing linear growth rate formulas and their cross-unit cointegration of non-scale endogenous growth models," MERIT Working Papers 2019-021, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
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    More about this item

    Keywords

    Human capital; Economic growth; Population growth; Dilution effects; Research & development;
    All these keywords.

    JEL classification:

    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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