Demographics and recent productivity performance: insights from cross-country comparisons

Over the last few decades, countries have experienced quite different patterns of productivity growth. In this paper, we emphasize the role of country level demographics in explaining these differences. In particular, looking over the period 1960-2002, we show that cross-country data support the notion that, starting in the late 1970s, countries went through a period of technological transition that lasted at least until the mid-1990s for the fastest adjusting countries and is still proceeding for the slower adjusting countries. The main claim of the paper is that the country-level rate of labour growth was a key factor driving the speed of adjustment to the new technological paradigm, implying that much of the cross-country difference in economic performance over recent decades can be explained by demographic differences across countries as opposed to the many other factors emphasized in the literature.