Abstract
This paper argues that the impact on economic growth from the on-going demographic transition in the population age-distribution depends critically on the relative importance of labor versus capital in production. Our key insight is that as the working fraction of the population decreases, output per person does not necessarily fall. Within an Overlapping Generations model with a Cobb-Douglas aggregate production function, population aging can increase output per person, if production is sufficiently capital intensive. Cross-country regressions provide empirical support for our theory.
Document Type
Restricted Article: Campus only access
Publication Date
3-12-2021
Publisher Statement
Copyright © 2021, Journal of Economic Insight.
The definitive version is available at: https://www.uky.edu/~slu239/Curtis_Lugauer_2019.pdf
Recommended Citation
Curtis, Chad and Lugauer, Steven. Population Aging, Economic Growth, and the Importance of Capital (2022) Journal of Economic Insight 48:1.
