Human capital formation and macroeconomic performance in an ageing small open economy

Heijdra, Ben J.; Romp, Ward E.

doi:10.1016/j.jedc.2008.09.003

Cited by 31 publications

(23 citation statements)

References 29 publications

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“…We operationalize the concept of economic longevity as follows. In the tradition of the recent macroeconomic literature on human capital accumulation we assume that individuals engage in full-time educational activities at the start of economic life and choose the optimal age of labour market entry (Kalemli-Ozcan et al 2000;Boucekkine et al 2002;Heijdra and Romp 2009). Incorporating the insights of the empirical labour economics literature on Mincerian wage equations, we assume that participating in the labour market boosts a worker's human capital stock and wage income as valuable experience is gained (cf.…”

Section: Introductionmentioning

confidence: 99%

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Human Capital Accumulation and the Macroeconomy in an Ageing Society

Heijdra

Reijnders

2016

De Economist

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How do population ageing shocks affect the long-run macroeconomic performance of an economy? To answer this question we build a general equilibrium overlapping generations model of a closed economy featuring endogenous factor prices. Finitely-lived individuals are endowed with perfect foresight and make optimal choices over the life cycle. In addition to selecting age profiles for consumption and the hours of time supplied to the labour market, they also choose their schooling level and retirement age. Human capital is accumulated as a result of work experience, the extent of which is determined by the intensity of labour supply. As the agent gets older, biological deterioration sets in and human capital depreciates at an increasing rate. This ultimately prompts the agent to withdraw from the labour market. The micro-We are much indebted to Fabian Kindermann for computational advice on efficient Matlab and Fortran programming, and to Jochen Mierau for providing us with a detailed survey of the human capital literature. This paper was presented at the

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Section: Introductionmentioning

confidence: 99%

“…A second, more recent strand of the literature adds human capital as an additional accumulable production factor. See, for example, Kalemli-Ozcan et al (2000), Heijdra and Romp (2009), and Ludwig et al (2012) and the references therein. One of the key features common to all these models is the endogeneity of the agent's schooling decision.…”

Section: Introductionmentioning

confidence: 99%

Human Capital Accumulation and the Macroeconomy in an Ageing Society

Heijdra

Reijnders

2016

De Economist

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“…So far, formal models on population ageing and human capital formation, concentrate on explaining educational activities at the individual level, e.g. Heijdra andRomp 2009 andBouccekine et al 2002, and its implication for the long run economic growth. Increased longevity will increase educational activities at the individual level and may boost economic growth at the aggregate level.…”

Section: Introductionmentioning

confidence: 99%

Optimal Education in an Age-Structured Model Under Changing Labor Demand and Supply

2011

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We introduce a model of the optimal education policy at the macro level, allowing for heterogeneity of the workforce with respect to its age and qualification skills. Within this framework we study the optimal education rate in the context of changes in labor demand (as represented by the elasticity of substitution across ages and qualification) and labor supply (as represented by a change in the population growth rates). Applying an age-structured optimal-control model, we derive features of the optimal age-specific education rate. Our results show that the relation between the elasticities of substitution of labor across ages plays a crucial role in the way the demographic changes affect (both in the short and in the long run) the optimal educational policy. We also show that under imperfect substitutability across age and qualification groups, the optimal educational policy is adjusted in advance to any change in the labor supply.

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“…4 Heijdra and Romp (2009a) as well as a previous version of Ludwig, Schelkle, and Vogel (2012) include a calibration analysis of endogenous growth through endogenous human capital investments of the households and a growth mechanism along the lines of Lucas (1988). The latter growth mechanism is also at the heart of a theoretical literature on the link between demographics, pensions, and growth.…”

Section: Introductionmentioning

confidence: 99%

Population, pensions, and endogenous economic growth

Heer

Irmen

2014

Journal of Economic Dynamics and Control

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Abstract:We study the effect of a declining labor force on the incentives to engage in labor-saving technical change and ask how this effect is influenced by institutional characteristics of the pension scheme. When labor is scarcer it becomes more expensive and innovation investments that increase labor productivity are more profitable. We incorporate this channel in a new dynamic general equilibrium model with endogenous economic growth and heterogeneous overlapping generations. We calibrate the model for the US economy and obtain the following results. First, the effect of a decline in population growth on labor productivity growth is positive and quantitatively significant. In our benchmark, it is predicted to increase from an average annual growth rate of 1.74% over 1990-2000 to 2.41% in 2100. Second, institutional characteristics of the pension system matter both for the growth performance and for individual welfare. Third, the assessment of pension reform proposals may depend on whether economic growth is endogenous or exogenous.Keywords: Growth, Demographic Transition, Capital Accumulation, Pension Reform. JEL-Classification: O41, C68, O11, D91.This Version: August 27, 2013. * We would like to thank Dirk Krueger, Alexander Ludwig, Klaus Wälde, and Ulrich Woitek for the provision of their respective data sets. Moreover, we are grateful to an anonymous referee and an associate editor for their comments.

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Human capital formation and macroeconomic performance in an ageing small open economy

Cited by 31 publications

References 29 publications

Human Capital Accumulation and the Macroeconomy in an Ageing Society

Human Capital Accumulation and the Macroeconomy in an Ageing Society

Optimal Education in an Age-Structured Model Under Changing Labor Demand and Supply

Population, pensions, and endogenous economic growth

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