IDEAS home Printed from https://ideas.repec.org/a/eee/eecrev/v173y2025ics0014292125000121.html
   My bibliography  Save this article

The wealth of working nations

Author

Listed:
  • Fernández-Villaverde, Jesús
  • Ventura, Gustavo
  • Yao, Wen

Abstract

Due to aging populations, the gap between GDP growth per capita and GDP growth per working-age adult (or per hour worked) has widened in many advanced economies. Countries like Japan, which have shown lackluster GDP growth per capita, have performed surprisingly well in terms of GDP growth per working-age adult (or per hour worked). Many advanced economies are also following similar balanced growth paths per working-age adult despite significant differences in the levels of GDP per working-age adult. We calibrate a standard neoclassical growth model to reflect changes in the working-age population for each economy. This model aligns more closely with the data for all the economies in our sample when we match GDP growth per working-age adult rather than when we match GDP growth per capita, the “canonical” calibration target.

Suggested Citation

  • Fernández-Villaverde, Jesús & Ventura, Gustavo & Yao, Wen, 2025. "The wealth of working nations," European Economic Review, Elsevier, vol. 173(C).
    • Handle: RePEc:eee:eecrev:v:173:y:2025:i:c:s0014292125000121
    DOI: 10.1016/j.euroecorev.2025.104962
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0014292125000121
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.euroecorev.2025.104962?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Domenico Ferraro & Giuseppe Fiori, 2020. "The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(2), pages 167-193, April.
    2. Kotschy, Rainer & Bloom, David E., 2023. "Population Aging and Economic Growth: From Demographic Dividend to Demographic Drag?," IZA Discussion Papers 16377, Institute of Labor Economics (IZA).
    3. Bloom, David E & Williamson, Jeffrey G, 1998. "Demographic Transitions and Economic Miracles in Emerging Asia," The World Bank Economic Review, World Bank, vol. 12(3), pages 419-455, September.
    4. David M. Cutler & James M. Poterba & Louise M. Sheiner & Lawrence H. Summers, 1990. "An Aging Society: Opportunity or Challenge?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(1), pages 1-74.
    5. Fernández-Villaverde, Jesús & Delventhal, Matthew J. & Guner, Nezih, 2021. "Demographic Transitions Across Time and Space," CEPR Discussion Papers 16708, C.E.P.R. Discussion Papers.
    6. Sasaki, Hiroaki & Hoshida, Keisuke, 2017. "The Effects Of Negative Population Growth: An Analysis Using A Semiendogenous R&D Growth Model," Macroeconomic Dynamics, Cambridge University Press, vol. 21(7), pages 1545-1560, October.
    7. Fatih Karahan & Benjamin Pugsley & Ayşegül Şahin, 2024. "Demographic Origins of the Start-up Deficit," American Economic Review, American Economic Association, vol. 114(7), pages 1986-2023, July.
    8. Jesus Fernandez-Villaverde & Dario Laudati & Lee Ohanian & Vincenzo Quadrini, 2023. "Accounting for the Duality of the Italian Economy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 50, pages 267-290, October.
    9. Yunus Aksoy & Henrique S. Basso & Ron P. Smith & Tobias Grasl, 2019. "Demographic Structure and Macroeconomic Trends," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(1), pages 193-222, January.
    10. Faruqee, Hamid & Muhleisen, Martin, 2003. "Population aging in Japan: demographic shock and fiscal sustainability," Japan and the World Economy, Elsevier, vol. 15(2), pages 185-210, April.
    11. Kitao, Sagiri, 2015. "Fiscal cost of demographic transition in Japan," Journal of Economic Dynamics and Control, Elsevier, vol. 54(C), pages 37-58.
    12. Nicholas Bloom & John Van Reenen, 2010. "Why Do Management Practices Differ across Firms and Countries?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 203-224, Winter.
    13. Nicole Maestas & Kathleen J. Mullen & David Powell, 2023. "The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 306-332, April.
    14. Charles I. Jones, 2022. "The End of Economic Growth? Unintended Consequences of a Declining Population," American Economic Review, American Economic Association, vol. 112(11), pages 3489-3527, November.
    15. Maxim Pinkovskiy & Xavier Sala-i-Martin, 2016. "Newer Need Not be Better: Evaluating the Penn World Tables and the World Development Indicators Using Nighttime Lights," NBER Working Papers 22216, National Bureau of Economic Research, Inc.
    16. repec:fth:harver:1490 is not listed on IDEAS
    17. Javier Cravino & Andrei Levchenko & Marco Rojas, 2022. "Population Aging and Structural Transformation," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(4), pages 479-498, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daniel Fehrle & Vasilij Konysev, 2025. "To converge or not to converge: Accounting for the German reunification," Discussion Paper Series 348, Universitaet Augsburg, Institute for Economics.
    2. Delalibera, Bruno R. & Pereira, Luciene & Rios, Heron & Serrano-Quintero, Rafael, 2024. "Capital misallocation and economic development in a dynamic open economy," Journal of Economic Dynamics and Control, Elsevier, vol. 168(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Madsen, Jakob B., 2025. "The aging society: Is growth reverting to pre-industrial levels in the 21st century?," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).
    2. Hellwagner, Timon & Weber, Enzo, 2021. "Labour Market Adjustments to Population Decline," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242455, Verein für Socialpolitik / German Economic Association.
    3. Davis, Colin & Hashimoto, Ken-ichi & Tabata, Ken, 2022. "Demographic structure, knowledge diffusion, and endogenous productivity growth," Journal of Macroeconomics, Elsevier, vol. 71(C).
    4. Iñigo Calvo-Sotomayor & Ekhi Atutxa & Ricardo Aguado, 2020. "Who Is Afraid of Population Aging? Myths, Challenges and an Open Question from the Civil Economy Perspective," IJERPH, MDPI, vol. 17(15), pages 1-17, July.
    5. Mauri Kotamaki & Jonne Lehtimaki, 2024. "Getting too old for this: Economic effects of ageing population in Finland," Discussion Papers 168, Aboa Centre for Economics.
    6. MIyamoto Hiroaki & Yoshino Naoyuki, 2021. "Effectiveness of Fiscal Policy in Aging Economies," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 17(3), pages 1-18, November.
    7. Jinqi Ye & Ziyan Chen & Bin Peng, 2021. "Is the demographic dividend diminishing in China? Evidence from population aging and economic growth during 1990–2015," Review of Development Economics, Wiley Blackwell, vol. 25(4), pages 2255-2274, November.
    8. Westerhout, Ed, 2018. "Paying for the Ageing Crisis : Who, How and When?," Discussion Paper 2018-001, Tilburg University, Center for Economic Research.
    9. Cao, Huoqing & Chen, Shiyi & Xi, Xican, 2023. "Aging, migration, and structural transformation in China," Economic Modelling, Elsevier, vol. 126(C).
    10. Steven Brakman & Tristan Kohl & Charles van Marrewijk, 2025. "DemoGravity: World Population and Trade in the 21st Century," Review of International Economics, Wiley Blackwell, vol. 33(2), pages 486-501, May.
    11. David E. Bloom & Michael Kuhn & Klaus Prettner, 2024. "Fertility in High-Income Countries: Trends, Patterns, Determinants, and Consequences," Annual Review of Economics, Annual Reviews, vol. 16(1), pages 159-184, August.
    12. Thomas Ziesemer & Anne von Gässler, 2021. "Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(2), pages 129-160, May.
    13. Banda, Mutisunge Allan, 2024. "Population age structure as a determinant of long-run macroeconomic growth: demographic endogenous growth theory," MPRA Paper 122725, University Library of Munich, Germany.
    14. Wu, Feifei & Xu, Peipei & Gao, Bo & Ma, Jing, 2024. "Export contraction and input switching in an aging China," China Economic Review, Elsevier, vol. 85(C).
    15. Theodore P. Lianos & Anastasia Pseiridis & Nicholas Tsounis, 2023. "Declining population and GDP growth," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.
    16. Westerhout, Ed, 2018. "Paying for the Ageing Crisis : Who, How and When?," Other publications TiSEM 417903d2-6318-4744-891e-1, Tilburg University, School of Economics and Management.
    17. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    18. Daniele Angelini, 2023. "Aging Population and Technology Adoption," Working Paper Series of the Department of Economics, University of Konstanz 2023-01, Department of Economics, University of Konstanz.
    19. Hiroaki Sasaki & Taichi Hori & Rokuhisa Hasegawa & Shigehiro Tajiri & Kaito Nakamura, 2025. "Growth with human capital accumulation and declining population: an augmented Solow model approach," Economics Bulletin, AccessEcon, vol. 45(1), pages 63-72.
    20. Doepke, Matthias & Hannusch, Anne & Kindermann, Fabian & Tertilt, Michèle, 2022. "The Economics of Fertility: A New Era," IZA Discussion Papers 15224, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    Demographics; Growth; Developed economies;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J1 - Labor and Demographic Economics - - Demographic Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eecrev:v:173:y:2025:i:c:s0014292125000121. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eer .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.