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Demographic Change and R&D-based Economic Growth: Reconciling Theory and Evidence

  • Klaus Prettner
  • Timo Trimborn

We analyze the effects of demographic change on medium- and long-run economic growth by setting forth an R&D-based growth model including an endogenous demographic structure. The model framework is consistent with the experience of industrialized countries, where declines in mortality are associated with even faster declines in fertility such that population growth slows down. We show that, in response to demographic change, technological progress and economic growth accelerate in the medium run but slow down in the long run. Numerical investigation reveals that the time period during which technological progress and economic growth are faster than without demographic change can be very long. Since the theoretical predictions for the medium run are consistent with the negative association between population growth and economic growth found in the empirical literature, the present framework can reconcile R&D-based growth theory with the available evidence.

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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c017_006.

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Length: 27 pages
Date of creation: Sep 2012
Date of revision:
Handle: RePEc:deg:conpap:c017_006
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  1. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," Working papers 527, Massachusetts Institute of Technology (MIT), Department of Economics.
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  9. David de la Croix & Matthias Doepke, 2001. "Inequality and Growth: Why Differential Fertility Matters," UCLA Economics Working Papers 803, UCLA Department of Economics.
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  11. Timo Trimborn & Karl-Josef Koch & Thomas Steger, 2006. "Multi-Dimensional Transitional Dynamics: A Simple Numberical Procedure," CESifo Working Paper Series 1745, CESifo Group Munich.
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  24. Prettner, Klaus & Bloom, David E. & Strulik, Holger, 2012. "Declining Fertility and Economic Well-Being: Do Education and Health Ride to the Rescue?," IZA Discussion Papers 6527, Institute for the Study of Labor (IZA).
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