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Contribution of demography to economic growth

Author

Listed:
  • Miguel Sánchez-Romero

    (Wittgenstein Centre for Demography and Global Human Capital (IIASA,VID/ÖAW, WU))

  • Gemma Abio

    (Universitat de Barcelona (UB))

  • Concepció Patxot

    (Universitat de Barcelona (UB))

  • Guadalupe Souto

    (Universitat Autónoma de Barcelona (UAB))

Abstract

From 1850 to 2000, in Western European countries life expectancy rose from 30–40 to 80 years and the average number of children per woman fell from 4 to 5 children to slightly more than one. To gauge the economic consequences of these demographic trends, we implement an overlapping generations model with heterogeneity by level of education in which individuals optimally decide their consumption of market- and home-produced goods as well as the time spent on paid and unpaid work. We find that around 17 $$\%$$ % of the observed increase in per-capita income growth from 1850 to 2000 was due to the demographic transition. Around 50 $$\%$$ % of the demographic contribution is explained by the increase in the average productivity per worker (productivity component), which arises from the change in the population’s age structure and the rise in households’ saving rate. The remaining 50 $$\%$$ % is explained by the higher growth rate of workers relative to the total population (translation component).

Suggested Citation

  • Miguel Sánchez-Romero & Gemma Abio & Concepció Patxot & Guadalupe Souto, 2018. "Contribution of demography to economic growth," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 27-64, March.
    • Handle: RePEc:spr:series:v:9:y:2018:i:1:d:10.1007_s13209-017-0164-y
    DOI: 10.1007/s13209-017-0164-y
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    3. Patrik Rovný & Serhiy Moroz & Jozef Palkovič & Elena Horská, 2021. "Impact of Demographic Structure on Economic Development of Ukrainian Coastal Regions," Sustainability, MDPI, vol. 13(4), pages 1-19, February.
    4. Antonio Cutanda & Juan A. Sanchis-Llopis, 2021. "Joint estimation of intertemporal labor and consumption decisions: evidence from Spanish households headed by working men," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 11(4), pages 611-629, December.
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    More about this item

    Keywords

    Demographic dividend; Fertility; Mortality; Per-capita income growth; Overlapping generations;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

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