Endogenous Depopulation and Economic Growth

Alberto Bucci () and Klaus Prettner

Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics

Abstract: Fertility rates have declined dramatically across almost all high-income countries over the past decades. This has raised concerns about future economic prospects. Indeed, fully– and semi–endogenous growth models imply that a shrinking workforce would lead to declining income growth and perhaps even stagnation. We extend the previous analyses to explicitly incorporate an endogenous quantity/quality trade-off between fertility and human capital accumulation. This allows us to assess the extent to which a declining number of workers can be compensated by increasing education. Our analysis demonstrates that economic growth needs not necessarily to decline with a falling population. Under certain conditions, human capital investment can sustain technological progress and economic growth despite the demographic challenges we are facing.

Keywords: Demographic Change; Fertility Decline; Economic Growth; Research and Development; Endogenous Fertility; Endogenous Education; Human Capital Accumulation (search for similar items in EconPapers)
JEL-codes: I25 J11 J13 O33 O41 (search for similar items in EconPapers)
Date: 2025-04
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Working Paper: Endogenous Depopulation and Economic Growth (2025)
Working Paper: Endogenous Depopulation And Economic Growth (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwwuw:wuwp377

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