Demographic Change, Human Capital and Endogenous Growth
Abstract
This paper employs a large scale overlapping generations (OLG) model with endogenous education to evaluate the quantitative role of human capital adjustments for the economic consequences of demographic change. We find that endogenous human capital formation is an important adjustment mechanism which substantially mitigates the macroeconomic impact of demographic change. Welfare gains from demographic change for newborn households are approximately three times higher when households endogenously adjust their education. Low ability agents experience higher welfare gains. Endogenous growth through human capital formation is found to increase the long-run growth rate in the economy by 0.2-0.4 percentage points.Download Info
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Paper provided by Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy in its series MEA discussion paper series with number 07151.Length:
Date of creation: 19 Oct 2007
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Handle: RePEc:mea:meawpa:07151
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Related research
Keywords:Other versions of this item:
- Ludwig, Alexander & Schelkle, Thomas & Vogel, Edgar, 2007. "Demographic Change, Human Capital and Endogenous Growth," Sonderforschungsbereich 504 Publications 08-43, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
- NEP-ALL-2008-01-26 (All new papers)
- NEP-DGE-2008-01-26 (Dynamic General Equilibrium)
- NEP-EDU-2008-01-26 (Education)
- NEP-HRM-2008-01-26 (Human Capital & Human Resource Management)
References
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Lassila , Jukka & Valkonen, Tarmo, 2008. "Population ageing and fiscal sustainability in Finland: a stochastic analysis," Research Discussion Papers 28/2008, Bank of Finland.
- Mathias Sommer, 2008. "Understanding the trends in income, consumption and wealth inequality and how important are life-cycle effects?," MEA discussion paper series 08160, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
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