Baby Busts and Growth Booms: Demographic Change and the Macroeconomy

Daron Acemoglu, David Autor, Keelan Beirne and Andrew Scott

No 21673, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The secular decline in birth rates across the globe over the past seven decades has slowed population growth, raised average ages, and reshaped labor markets and the macroeconomy. Contrary to the widespread expectation that these trends hamper economic growth, we find lower birth rates are associated with higher growth in GDP per working-age adult across countries and higher wage growth across US commuting zones, with no negative impact on aggregate GDP or earnings. These patterns are not explained by educational upgrading, rising female labor force participation, the declining importance of agriculture, or neoclassical-Solow mechanisms. We argue that they reflect the endogenous, labor-saving response of technology to the scarcity of younger workers. Consistent with this interpretation, countries and regions with lower birth rates exhibit more labor-saving patents and growing high-tech activity. There is also higher TFP growth across countries and industries. Exploiting cross-country variation in WWII military and civilian deaths, we find that declines in younger population, rather than population size per se, drive our results.

Keywords: Population; growth (search for similar items in EconPapers)
JEL-codes: E24 J11 J31 O33 O40 (search for similar items in EconPapers)
Date: 2026-06
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Working Paper: Baby Busts and Growth Booms: Demographic Change and the Macroeconomy (2026)
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