Demographic Maturity and Economic Performance: The Effect of Demographic Transitions on Per Capita GDP Growth

Rafael Gomez and Pablo Hernández de Cos

No 318, Working Papers from Banco de España

Abstract: This paper estimates the response of per capita GDP growth to changes in the proportion of mature workers across countries. We define and estimate the effect of demographic maturity in two ways. First, a growing cohort of working age persons (15-64) is found to have a large positive effect on growth of GDP per capita. Second, an increase in the number of prime age workers (35-54) as a fraction of the total working age population (15-64) is found to have a positive but diminishing effect on per capita GDP growth. We find that growth peaks when the ratio of prime age workers over the potentially active population reaches 0.36. Beyond this ratio, diminishing returns set in. Several well known theoretical models of economic growth and labour market performance are consistent with these findings. In particular, the standard life-cycle framework, "Mincerian" earnings equations and personnel economic models of optimal mixes of youth and mature human capital all find confirmation in these estimates.

Keywords: growth; demography; age structure (search for similar items in EconPapers)
JEL-codes: J13 J16 O11 O40 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2003-12
References: Add references at CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0318

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