Measuring the Contribution of Demographic Change and Human Capital to Economic Growth in Russia

Natalia Akindinova, Kseniya Chekina and Alexander Yarkin
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Natalia Akindinova: National Research University Higher School of Economics, Moscow, Russia
Kseniya Chekina: National Research University Higher School of Economics, Moscow, Russia

HSE Economic Journal, 2017, vol. 21, issue 4, 533-561

Abstract: This article offers a new approach to growth accounting in Russia, identifying fundamental and cyclical components, including capacity utilisation and the employment level. A detailed decomposition of the labour contribution to growth is conducted to identify demographic effects. A modified index of human capital is developed that considers the impact on GDP of educational attainment (based on PISA scores) and changes in health (the fall in mortality among those of working age). This is used to refine the historical trend in total factor productivity. The article provides the results of a decomposition of the historical GDP trend in Russia in 2000–2016, and of two long-term forecasts of economic growth, along with the contribution of the individual components. It is shown that under the inertia scenario the labour contribution to growth will be negative across the whole period to 2035. Given established trends in investment and total factor productivity, and moderate oil prices, the long-term growth rate in Russia will remain close to 1% a year. These negative demographic effects cannot be fully offset through a reform of the pension system. At the same time, it is shown that a rapid convergence with the level of human capital in developed countries would allow for a significant acceleration in the rate of economic growth.

Keywords: decomposition of economic growth rates; demographic dividend; human capital; convergence; PISA; mortality in working-age population (search for similar items in EconPapers)
JEL-codes: E13 E17 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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