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Demographic change, human capital and endogenous growth

Alexander Ludwig (), Thomas Schelkle () and Edgar Vogel

No 08-43, Papers from Sonderforschungsbreich 504

Abstract: This paper employs a large scale overlapping generations (OLG) model with endogenous education to evaluate the quantitative role of human capital adjustment for the economic consequences of demographic change. We find that endogenous human capital formation is an important adjustment mechanism which substantially mitigates the macroeconomic impact of demographic change. Welfare gains from demographic change for newborn households are approximately three times higher when households endogenously adjust their education. Low ability agents experience higher welfare gains. Endogenous growth through human capital formation is found to increase the long-run growth rate in the economy by 0.2-0.4 percentage points.

Keywords: population aging; human capital; endogeous growth; heterogenous agents; distrubtion of welfare (search for similar items in EconPapers)
JEL-codes: E17 E25 J24 J11 C68 D33 (search for similar items in EconPapers)
Date: 2007
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Working Paper: Demographic Change, Human Capital and Endogenous Growth (2007) Downloads
Working Paper: Demographic Change, Human Capital and Endogenous Growth (2007)
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