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The impact of population structure on economic growth has been studied in recent decades using different methods to estimate the so‐called demographic dividend. Besides, education has been pointed out as a key factor in economic growth. We propose a decomposition of the demographic dividend, into age and education effects. We illustrate the potentialities of the method, deriving an application to Mexico and Spain over the period 1970‐2100. To that end, we estimate the National Transfer Accounts age profiles by schooling level and apply them to recently available population projections stratified by education level. Our results confirm the role of population age structure in the demographic dividend, but also reveal that education attainment can be even more crucial. Moreover, we find that how both age and education effects finally impact on economic growth depends to a great extent on the specific consumption and labor income age profiles in each country.

From 1850 to 2000, in Western European countries life expectancy rose from 30-40 to 80 years and the average number of children per woman fell from 4 to 5 children to slightly more than one. To gauge the economic consequences of these demographic trends, we implement an overlapping generations model with heterogeneity by level of education in which individuals optimally decide their consumption of market-and home-produced goods as well as the time spent on paid and unpaid work. We find that around 17% of the observed increase in per-capita income growth from 1850 to 2000 was due to the demographic transition. Around 50% of the demo-This project has received institutional support from the European Union's Seventh Framework Programme for research, technological development and demonstration (AGENTA project, grant agreement No: 613247). SERIEs (2018) 9:27-64 graphic contribution is explained by the increase in the average productivity per worker (productivity component), which arises from the change in the population's age structure and the rise in households' saving rate. The remaining 50% is explained by the higher growth rate of workers relative to the total population (translation component). Electronic supplementary material The online version of this article (

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Working papers of the Max Planck Institute for Demographic Research receive only limited review. Views or opinions expressed in working papers are attributable to the authors and do not necessarily refl ect those of the Institute.

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