The importance of being mature: the effect of demographic maturation on global per-capita income
Given that savings and productivity follow a hump shaped profile with respect to age and given that demographic profiles vary across countries, population age structure may be linked to differences in levels of economic development. In this paper we measure the importance of age structure in accounting for differences in per capita income levels and the dispersion of those income levels across countries. We find that even after adjusting for country-specific effects, age structure variation can account for a large portion of differences in per capita income and the lack of sigma convergence observed in cross country data. For the global economy as a whole, we find that demographic maturation has had a strong and positive effect on the evolution of global per capita income since 1960.
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