Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital
Thomas Ziesemer () and
Anne von Gässler
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Anne von Gässler: Maastricht University
Portuguese Economic Journal, 2021, vol. 20, issue 2, No 1, 129-160
Abstract We add endogenous labour supply to exogenous population growth in an Uzawa-Lucas endogenous growth model with international capital movements. Under non-linearity from a decreasing marginal product of labour in education and a positive human capital externality in output production, a combination of an estimated debt-interest relation and a realistic calibration of the model shows the following. (i) The demographic dividends from a fall in the population growth rate increase welfare in the short run and reduce it in the long run. (ii) A higher (lower) growth rate of the dependency ratio leads to a higher (lower) optimal level of education and technical change. (iii) Lower past cumulated savings lead to a higher foreign-debt/GDP ratio, higher interest rates, more education time and technical change, and more consumption in the future rather than the present. (iv) A higher depreciation rate of human capital through ageing has a stronger impact on growth rates than all other variables that could be associated with ageing and a good mitigating policy is to spend more time on education.
Keywords: Ageing; Human capital; Endogenous growth; Open economy (search for similar items in EconPapers)
JEL-codes: F43 J11 O11 O33 O41 (search for similar items in EconPapers)
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