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

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  • Klaus Prettner
  • Timo Trimborn

Abstract

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.

Suggested Citation

  • Klaus Prettner & Timo Trimborn, 2012. "Demographic Change and R&D-based Economic Growth: Reconciling Theory and Evidence," DEGIT Conference Papers c017_006, DEGIT, Dynamics, Economic Growth, and International Trade.
  • Handle: RePEc:deg:conpap:c017_006
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    References listed on IDEAS

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    1. Klaus Prettner, 2013. "Population aging and endogenous economic growth," Journal of Population Economics, Springer;European Society for Population Economics, pages 811-834.
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    Citations

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    Cited by:

    1. Gehringer, Agnieszka & Prettner, Klaus, 2014. "Longevity and technological change," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 01/2014, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
    2. Michael Kuhn & Klaus Prettner, 2015. "Population Structure and Consumption Growth: Evidence from National Transfer Accounts," VID Working Papers 1503, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna.
    3. Hof, Franz X. & Prettner, Klaus, 2016. "The quest for status and R&D-based growth," ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy 01/2016, Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON).
    4. Koichi Futagami & Kunihiko Konishi, 2017. "Rising Longevity, Fertility Dynamics, and R&D-based Growth," Discussion Papers in Economics and Business 17-26, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

    More about this item

    Keywords

    Demographic change; Technological progress; Economic growth; Semiendogenous growth theory; Transitional dynamics;

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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