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Population decline, capital deepening, and productivity: cross-country evidence

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  • Jalles, João Tovar

Abstract

This paper examines the relationship between population decline, capital deepening, and productivity growth using cross-country panel data over 1975–2023. Consistent with standard growth theory, slower population growth is associated with faster capital deepening. Conditional on controls, it is also linked to stronger GDP per worker growth, particularly in more technologically advanced economies. The results suggest that demographic headwinds can induce adjustment through capital deepening and labor-saving technologies. While population decline is not inherently beneficial, endogenous investment and technology responses partly offset its adverse effects on growth.

Suggested Citation

  • Jalles, João Tovar, 2026. "Population decline, capital deepening, and productivity: cross-country evidence," Economics Letters, Elsevier, vol. 267(C).
    • Handle: RePEc:eee:ecolet:v:267:y:2026:i:c:s016517652600265x
    DOI: 10.1016/j.econlet.2026.113071
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    Keywords

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    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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