Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital

Thomas Ziesemer*, Anne von Gassler

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We add endogenous labour supply to exogenous population growth in an Uzawa-Lucas endogenous growth model with international capital movements. Under non-linearity from a decreasing marginal product of labour in education and a positive human capital externality in output production, a combination of an estimated debt-interest relation and a realistic calibration of the model shows the following. (i) The demographic dividends from a fall in the population growth rate increase welfare in the short run and reduce it in the long run. (ii) A higher (lower) growth rate of the dependency ratio leads to a higher (lower) optimal level of education and technical change. (iii) Lower past cumulated savings lead to a higher foreign-debt/GDP ratio, higher interest rates, more education time and technical change, and more consumption in the future rather than the present. (iv) A higher depreciation rate of human capital through ageing has a stronger impact on growth rates than all other variables that could be associated with ageing and a good mitigating policy is to spend more time on education.
Original languageEnglish
Pages (from-to)129-160
Number of pages32
JournalPortuguese Economic Journal
Volume20
Issue number2
Early online date19 Jun 2020
DOIs
Publication statusPublished - May 2021

Keywords

  • Ageing
  • Human capital
  • Endogenous growth
  • Open economy
  • SKILL PORTFOLIO EVIDENCE
  • LIFE EXPECTANCY
  • SECULAR STAGNATION
  • TECHNICAL CHANGE
  • ECONOMIC-GROWTH
  • POPULATION
  • MORTALITY
  • TRENDS
  • AGE
  • SUBSTITUTION

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