Population Aging, Economic Growth, and the Importance of Capital

Chadwick Curtis and Steven Lugauer

Journal of Economic Insight, 2022, vol. 48, issue 1, 19-31

Abstract: This paper argues that the impact on economic growth from the on-going demographic transition in the population age-distribution depends critically on the relative importance of labor versus capital in production. Our key insight is that as the working fraction of the population decreases, output per person does not necessarily fall. Within an Overlapping Generations model with a Cobb-Douglas aggregate production function, population aging can increase output per person, if production is sufficiently capital intensive. Crosscountry regressions provide empirical support for our theory.

JEL-codes: E1 E2 J1 O4 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:mve:journl:v:48:y:2022:i:1:p:19-31

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