The Growth Effects of Population Aging in an Economy with Endogenous Technological Progress

Young Jun Chun
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Young Jun Chun: Hanyang University

Korean Economic Review, 2013, vol. 29, 51-80

Abstract: We address the effects of population aging on economic growth, taking account of its growth-delaying effects, through the reduction of capital accumulation and labor force, and the R&D investment reduction due to its lowered return resulting from reduced market size, as well as its growth-promoting effects, through the increase in educational investment due to decrease in the number of child per parent. The policy simulations with a general equilibrium model and its calibration, reflecting the Korean economy, show that: (1) the population aging delays technological progress as well as quantitative economic growth; (2) the government subsidies to R&D and educational investment can partly compensate for the loss in economic growth due to the population aging, but they cannot deal with the problem fundamentally; and (3) the optimal subsidy rates to R&D and education are quite high, ranging from 50 to 70% to R&D and from 70 to 80% to education.

Keywords: Population Aging; Growth; Research and Development; Educational Investment (search for similar items in EconPapers)
JEL-codes: H21 J11 J24 O3 O4 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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