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Does demographic change matter for growth?

  • Liao, Pei-Ju

How important is the demographic transition for economic growth? To answer this question, this paper constructs a general equilibrium overlapping generations model with endogenous fertility. The model is calibrated to data from Taiwan, a country that experienced rapid economic growth while undergoing significant demographic transition. Our results suggest that more than one-third of the output growth in Taiwan during the past four decades can be attributed to demographic transition, while TFP growth explains another third and the remainder is mainly due to skill-biased technological progress. Our results show that demographic change is an important driver of the growth process in countries undergoing rapid fertility decline.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 55 (2011)
Issue (Month): 5 (June)
Pages: 659-677

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Handle: RePEc:eee:eecrev:v:55:y:2011:i:5:p:659-677
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