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Population aging and endogenous economic growth

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  • Klaus Prettner

    () (Harvard Center for Population and Development Studies)

Abstract

This article investigates the consequences of population aging for long-run economic growth perspectives. We introduce age specific heterogeneity of households into a model of research and development (R&D) based technological change. We show that the framework incorporates two standard specifications as special cases: endogenous growth models with scale e ects and semi-endogenous growth models without scale effects. The introduction of an age structured population implies that aggregate laws of motion for capital and consumption have to be obtained by integrating over different cohorts. It is analytically shown that these laws of motion depend on the underlying demographic assumptions. Our results are that (i) increases in longevity have positive effects on per capita output growth, (ii) decreases in fertility have negative effects on per capita output growth, (iii) the longevity effect dominates the fertility e ect in case of endogenous growth models and (iv) population aging fosters long-run growth in endogenous growth models, while the converse holds true in semiendogenous growth frameworks.

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Bibliographic Info

Paper provided by Program on the Global Demography of Aging in its series PGDA Working Papers with number 7211.

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Date of creation: Jul 2011
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Handle: RePEc:gdm:wpaper:7211

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Keywords: population aging; endogenous technological change; longrun economic growth;

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Citations

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Cited by:
  1. Michael Kuhn & Klaus Prettner, 2012. "Growth and welfare e ffects of health care in knowledge based economies," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 120, Courant Research Centre PEG.
  2. Holger Strulik & Klaus Prettner & Alexia Prskawetz, 2011. "R&D-based Growth in the Post-modern Era," PGDA Working Papers 7411, Program on the Global Demography of Aging.
  3. Theresa Grafeneder-Weissteiner & Klaus Prettner, 2010. "Agglomeration processes in aging societies," Department of Economics Working Papers wuwp131, Vienna University of Economics, Department of Economics.
  4. Theresa Grafeneder-Weissteiner, 2010. "Demographic change, growth and agglomeration," Department of Economics Working Papers wuwp132, Vienna University of Economics, Department of Economics.
  5. Bilal Barakat & Johannes Holler & Klaus Prettner & Julia Schuster, 2010. "The Impact of the Economic Crisis on Labour and Education in Europe," Working Papers 1006, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
  6. Klaus Prettner & Alexia Prskawetz, 2010. "Demographic Change in Models of Endogenous Economic Growth. A Survey," Working Papers 1008, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
  7. Theresa Grafeneder-Weissteiner, 2011. "The joint effect of demographic change on growth and agglomeration," ERSA conference papers ersa10p834, European Regional Science Association.
  8. Thomas Fent & Belinda Aparicio Diaz & Alexia Prskawetz, 2010. "Family Policies in the Context of Low Fertility and Social Structure," Working Papers 1102, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
  9. Ben Heijdra & Jochen Mierau, 2011. "The Individual Life Cycle and Economic Growth: An Essay on Demographic Macroeconomics," De Economist, Springer, vol. 159(1), pages 63-87, March.

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