Population aging and endogenous economic growth

Prettner, Klaus

doi:10.1007/s00148-012-0441-9

“…where Heijdra and van der Ploeg, 2002;Prettner, 2013). Consequently, aggregate consumption growth is always lower than individual consumption growth.…”

Section: Aggregationmentioning

confidence: 99%

Longevity and Technological Change

Gehringer

¹

,

Prettner

²

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe analyze the impact of increasing longevity on technological progress within an R&D-based endogenous growth framework and test the model's implications on OECD data from 1960 to 2011. The central hypothesis derived in the theoretical part is that -by raising the incentives of households to invest in physical capital and in R&D -decreasing mortality positively impacts upon technological progress and thereby also on productivity growth. The empirical results clearly confirm the theoretical prediction which implies that the ongoing demographic changes in industrialized economies are not necessarily detrimental to economic prosperity, at least as far as technological progress and productivity growth are concerned.

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“…Prettner (2013), in a useful paper, introduces fertility, mortality and population age distribution into models of endogenous technological progress (dependent on population size) and semi-endogenous (dependent on population 43 growth rates, as in Jones above) that previously had homogeneous individuals. In his analysis lower fertility does impede progress but longer life favors it by reducing discount rates and encouraging investment in human capital, and it is the balance of these effects that matters.…”

Section: B Endogenous Growth and Population Agingmentioning

confidence: 99%

Macroeconomics, Aging and Growth

Lee

2016

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Inevitable population aging and slower population growth will affect the economies of all nations in ways influenced by cultural values, institutional arrangements, and economic incentives. One outcome will be a tendency toward increased capital intensity, higher wages, and lower returns on capital, a tendency partially offset when the elderly are supported by public or private transfers rather than assets, and when economies are open, in which case aging will lead to increased flows of capital and labor. Rising human capital investment per child accompanies the falling fertility that drives population aging, and partially offsets slower labor force growth. Research to date finds little effect on technological progress or labor productivity. National differences in labor supply at older ages, per capita consumption of the elderly relative to younger ages, strength of public pension and health care systems, and health and vitality of the elderly all condition the impact of population aging on the economy. Policy responses include increasing the size of the labor force, mainly by raising the retirement age; reducing benefits and/or raising taxes for public transfer programs for the elderly, with concern for dead-weight loss and the fair distribution of costs across socioeconomic classes; investing more in children to increase the quality and productivity of the future labor force; and public programs that promote fertility by facilitating market work for women with children. Ronald IntroductionAs low fertility and longer life lead to increased numbers of elderly relative to younger adults, there is increasing concern about possible macroeconomic consequences. These consequences unfold on the time scale of demographic change, which is to say not from quarter-to-quarter or year-to-year, but rather decadeto-decade. Will rising old age dependency reduce consumption per capita? Will there be a deepening of capital, and if so, will rates of return drop, leading to an "asset price meltdown"? Or will capital instead flow to the younger developing countries, so that rates of return in developed countries fall less? Might the quality of more highly educated labor effectively substitute for quantity? Will an older labor force be less productive and will innovation and technological progress slow down? Will longer-working elderly crowd out employment of the young? Has population aging already brought secular stagnation to the rich nations of the world, underlying the anemic recovery from the Great Recession and condemning their economies to recurring asset price bubbles? This chapter discusses these and related points.Samuelson (1958, 1975a) was one of the first economists to focus attention on the broader issues surrounding population growth rates, old age dependency, capital deepening, and the central role of intergenerational transfers in shaping the relations among these. A landmark paper by Cutler, Poterba, Sheiner and Summers (1990) framed and analyzed the macroeconomic issues in greater detail with more demog...

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“…In contrast to the representative agent assumption on which the Romer (1990) framework relies, we assume the following demographic structure (see Blanchard, 1985;Heijdra and van der Ploeg, 2002;Prettner, 2013): At each point in time (t), different cohorts that are distinguishable by their date of birth (t 0 ) are alive. A cohort consists of a measure L(t 0 , t) of individuals each of whom inelastically supplies one unit of labor to the labor market.…”

Section: Basic Assumptionsmentioning

confidence: 99%

“…Our contribution therefore relates most closely to the R&D-based growth literature that studies the determinants of technological progress and productivity growth as equilibrium market outcomes resulting from the interaction of utility-maximizing individuals and profitmaximizing firms. 1 To analyze our research question from a theoretical perspective, we follow Kuhn and Prettner (2012), Prettner and Trimborn (2012), and Prettner (2013) in proposing a framework of R&D-based endogenous economic growth according to Romer (1990) with a demographic structure of overlapping generations in the spirit of Blanchard (1985). Our main theoretical finding suggests that increasing longevity positively affects technological progress and therefore productivity growth.…”

Section: Introductionmentioning

confidence: 99%

Longevity and Technological Change

Gehringer

¹

,

Prettner

²

2014

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe analyze the impact of increasing longevity on technological progress within an R&D-based endogenous growth framework and test the model's implications on OECD data from 1960 to 2011. The central hypothesis derived in the theoretical part is that -by raising the incentives of households to invest in physical capital and in R&D -decreasing mortality positively impacts upon technological progress and thereby also on productivity growth. The empirical results clearly confirm the theoretical prediction which implies that the ongoing demographic changes in industrialized economies are not necessarily detrimental to economic prosperity, at least as far as technological progress and productivity growth are concerned.

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Population aging and endogenous economic growth

Cited by 193 publications

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Longevity and Technological Change

Longevity and Technological Change

Macroeconomics, Aging and Growth

Longevity and Technological Change

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