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Population Ageing and Productivity: Implications and Policy Options for New Zealand

This paper critically evaluates the effects of population ageing on labour productivity with particular reference to New Zealand. A number of potential long run mechanisms are considered: complementarity of workers by age, age-specific productivity of individuals, new technology discoveries and adoptions, fertility and human capital investments. Potential short run channels include: the ‘second demographic dividend’, changes in industry composition, incentives to seek labour saving technologies. Simulations tentatively suggest that workers could become more complimentary by age which would boost labour productivity. The magnitude of this effect on living standards could entirely offset the projected 12 per cent fall in the support ratio over the next 40 years. The most effective policies for mitigating the national economic burden of ageing are policies to boost labour participation of older workers and to boost immigration.

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Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 13/21.

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Length: 30
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:nzt:nztwps:13/21
Contact details of provider: Postal: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
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  1. Robert M. Schmidt & Allen C. Kelley, 1996. "Saving, dependency and development," Journal of Population Economics, Springer, vol. 9(4), pages 365-386.
  2. Becker, Gary S & Lewis, H Gregg, 1973. "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S279-88, Part II, .
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  10. Guest, R.S. & McDonald, I.M., 1999. "Population Ageing and Projections of Government Social Outlays in Australia," Department of Economics - Working Papers Series 689, The University of Melbourne.
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  12. Matthew Bell & Gary Blick & Oscar Parkyn & Paul Rodway & Polly Vowles, 2010. "Challenges and Choices: Modelling New Zealand’s Long-term Fiscal Position," Treasury Working Paper Series 10/01, New Zealand Treasury.
  13. Anne Gauthier, 2007. "The impact of family policies on fertility in industrialized countries: a review of the literature," Population Research and Policy Review, Springer, vol. 26(3), pages 323-346, June.
  14. Rafael Gómez & Pablo Hernández de Cos, 2008. "Does Population Ageing Promote Faster Economic Growth?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 350-372, 09.
  15. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, July.
  16. Edith Duclos & Pierre Lefebvre & Philip Merrigan, 2001. "A 'Natural Experiment' on the Economics of Storks: Evidence on the Impact of Differential Family Policy on Fertility Rates in Canada," Cahiers de recherche CREFE / CREFE Working Papers 136, CREFE, Université du Québec à Montréal.
  17. Glenn Withers, 2002. "Population Ageing and the Role of Immigration," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(1), pages 104-112.
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