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The importance of being mature: the effect of demographic maturation on global per-capita income

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  • Rafael Gómez

    ()
    (London School of Economics)

  • Pablo Hernández de Cos

    ()
    (Banco de España)

Abstract

Given that savings and productivity follow a hump shaped profile with respect to age and given that demographic profiles vary across countries, population age structure may be linked to differences in levels of economic development. In this paper we measure the importance of age structure in accounting for differences in per capita income levels and the dispersion of those income levels across countries. We find that even after adjusting for country-specific effects, age structure variation can account for a large portion of differences in per capita income and the lack of sigma convergence observed in cross country data. For the global economy as a whole, we find that demographic maturation has had a strong and positive effect on the evolution of global per capita income since 1960.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/06/Fic/do0604e.pdf
File Function: First version, June 2006
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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Occasional Papers with number 0604.

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Length: 31 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:bde:opaper:0604

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Keywords: age structure; life cycle savings model; cross-country growth;

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  1. Steven N. Durlauf & Danny T. Quah, 1998. "The New Empirics of Economic Growth," NBER Working Papers 6422, National Bureau of Economic Research, Inc.
  2. David E. Bloom & Jeffrey G. Williamson, 1997. "Demographic Transitions and Economic Miracles in Emerging Asia," NBER Working Papers 6268, National Bureau of Economic Research, Inc.
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  9. Franco Modigliani & Shi Larry Cao, 2004. "The Chinese Saving Puzzle and the Life-Cycle Hypothesis," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 145-170, March.
  10. Rafael Gómez & Pablo Hernández de Cos, 2003. "Demographic Maturity and Economic Performance: The Effect of Demographic Transitions on Per Capita GDP Growth," Banco de Espa�a Working Papers 0318, Banco de Espa�a.
  11. Schultz, T.P., 1998. "Inequality in the Distribution of Personal Income in the World: How It Is Changing and Why," Papers 784, Yale - Economic Growth Center.
  12. Michael Sarel, 1995. "Demographic Dynamics and the Empirics of Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 42(2), pages 398-410, June.
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  15. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
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