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The importance of being mature: the effect of demographic maturation on global per-capita income

  • Rafael Gómez

    ()

    (London School of Economics)

  • Pablo Hernández de Cos

    ()

    (Banco de España)

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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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/06/Fic/do0604e.pdf
File Function: First version, June 2006
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Paper provided by Banco de Espa�a in its series Banco de Espa�a Occasional Papers with number 0604.

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Length: 31 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:bde:opaper:0604
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  1. Modigliani, Franco, 1985. "Life Cycle, Individual Thrift and the Wealth of Nations," Nobel Prize in Economics documents 1985-1, Nobel Prize Committee.
  2. Galor, Oded & Weil, David, 1995. "The Gender Gap, Fertility and Growth," CEPR Discussion Papers 1157, C.E.P.R. Discussion Papers.
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  10. Franco Modigliani & Shi Larry Cao, 2004. "The Chinese Saving Puzzle and the Life-Cycle Hypothesis," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 145-170, March.
  11. David E. BLOOM & Jocelyn E. FINLAY, 2009. "Demographic Change and Economic Growth in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 4(1), pages 45-64.
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  13. Richard B. Freeman, 1978. "Unionism and the Dispersion of Wages," NBER Working Papers 0248, National Bureau of Economic Research, Inc.
  14. Rafael Gómez & Pablo Hernández de Cos, 2003. "Demographic Maturity and Economic Performance: The Effect of Demographic Transitions on Per Capita GDP Growth," Banco de Espa�a Working Papers 0318, Banco de Espa�a.
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