Long-run economic growth despite population decline

Holger Strulik

Journal of Economic Dynamics and Control, 2024, vol. 168, issue C

Abstract: When economic growth is driven by the discovery of new ideas and physical labor is the input in ideas production, population decline inevitably leads to the stagnation of living standards. Here, I reconsider the problem of declining population when ideas are produced by an educated workforce and show that steady positive growth of ideas and income is a plausible outcome. The reason is that the accumulation of human capital offsets the negative effects of population growth. In a general equilibrium model with diminishing returns to education, I show that households generate the constant education effort needed to sustain high economic growth.

Keywords: Long-run growth; Innovation; Fertility; Education; Demographic transition (search for similar items in EconPapers)
JEL-codes: J11 J13 O11 O41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:168:y:2024:i:c:s0165188924001350

DOI: 10.1016/j.jedc.2024.104943

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