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Does Population Ageing Promote Faster Economic Growth?

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  • Rafael Gómez
  • Pablo Hernández de Cos

Abstract

Can divergent demographic trends account for differences in per capita output across countries? We address this question by offering evidence that the process of population ageing is positively and significantly related to cross-country economic performance. We define and estimate the effect of demographic change in two ways. First, a growing cohort of working age persons (15-64) as a share of the total population is found to have a large positive effect on GDP per capita . Second, an increase in the number of prime age persons (35-54) relative to the younger working age population (15-34) is found to have a positive but curvilinear effect with respect to per capita GDP. We find that changes in per capita GDP peak when the ratio of the prime-to-younger age population reaches an optimum of prime age workers for every younger aged worker. Beyond or below this optimal ratio, per capita output is lowered. Copyright 2008 The Authors. Journal compilation 2008 International Association for Research in Income and Wealth Published.

Suggested Citation

  • Rafael Gómez & Pablo Hernández de Cos, 2008. "Does Population Ageing Promote Faster Economic Growth?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 350-372, September.
  • Handle: RePEc:bla:revinw:v:54:y:2008:i:3:p:350-372
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    Cited by:

    1. Donghyun Park & Kwanho Shin, 2012. "Impact of population aging on Asia’s future growth," Chapters,in: Aging, Economic Growth, and Old-Age Security in Asia, chapter 3, pages 83-110 Edward Elgar Publishing.
    2. Birgit Aigner-Walder & Thomas Döring, 2012. "The Effects of Population Ageing on Private Consumption — A Simulation for Austria Based on Household Data up to 2050," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, pages 63-80.
    3. Ross Guest, 2013. "Population Ageing and Productivity: Implications and Policy Options for New Zealand," Treasury Working Paper Series 13/21, New Zealand Treasury.
    4. Thomas Flochel & Yuki Ikeda & Harry Moroz & Nithin Umapathi, 2014. "Macroeconomic Implications of Aging in East Asia Pacific," World Bank Other Operational Studies 23026, The World Bank.
    5. Crespo Cuaresma, Jesus & Lábaj, Martin & Pružinský, Patrik, 2014. "Prospective ageing and economic growth in Europe," The Journal of the Economics of Ageing, Elsevier, vol. 3(C), pages 50-57.
    6. Muysken, Joan & Ziesemer, Thomas, 2011. "Immigration and growth in an ageing economy - version 2," MERIT Working Papers 037, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. M. Narayana, 2015. "India’s Age Structure Transition, Sectoral Labor Productivities, and Economic Growth: Evidence and Implications Based on National Transfer Accounts," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), pages 381-415.
    8. Ilmakunnas, Pekka & Miyakoshi, Tatsuyoshi, 2013. "What are the drivers of TFP in the Aging Economy? Aging labor and ICT capital," Journal of Comparative Economics, Elsevier, pages 201-211.

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