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Demographic Structure and Comparative Advantages: Theory and Evidence

Author

Listed:
  • Chih-Hai Yang

    (Department of Economics, National Central University)

  • Chu-Ping Lo

    (Department of Agricultural Economics, National Taiwan University)

Abstract

We present a simple model to address how the demographic structure of a country determines trade patterns. A country with a higher ratio of youth in its workforce demonstrates more learning-by-doing capability and is associated with a faster productivity catch-up to a technology frontier country, thereby gaining comparative advantages in more industries and thus higher incomes. This theoretical prediction is supported by cross-country evidence obtained from a system GMM estimation. We find that the age group 25-44 has the largest influence on productivity catch-up. Moreover, a high quality of human capital among those who study abroad significantly facilitates productivity catch-up.

Suggested Citation

  • Chih-Hai Yang & Chu-Ping Lo, 2025. "Demographic Structure and Comparative Advantages: Theory and Evidence," Annals of Economics and Finance, Society for AEF, vol. 26(1), pages 311-332, May.
    • Handle: RePEc:cuf:journl:y:2025:v:26:i:1:yanglo
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    More about this item

    Keywords

    Demographic structure; Productivity; Comparative advantage;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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