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Population Aging, Retirement, and Aggregate Productivity

Klaus Gründler () and Niklas Potrafke

No 10594, CESifo Working Paper Series from CESifo

Abstract: Most industrialized countries today are facing historical demographic changes, paring increasing retirement with a declining labor force. We study the consequences of an increasing pensioner-worker ratio in a macroeconomic framework, which suggests a negative effect on total factor productivity. Using newly collected longitudinal data on pensioners, we quantify this effect by exploiting variation in the pre-determined component of retirement. We find that a 10-point increase in the pensioner-worker ratio decreases factor productivity by 5-6%. The effect is stronger when production is labor intensive and automation potential is low. Economic aging also impedes the creation of innovation at the technological frontier.

Keywords: aging; retirement; factor productivity; secular stagnation; demographic transition (search for similar items in EconPapers)
JEL-codes: C23 C26 D24 J11 J14 O40 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-age, nep-eff, nep-gro and nep-lab
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