Serving the old: ageing and economic growth
A. C. Meijdam
Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Economics
E A. A. Verbon
affiliation not provided to SSRN
Oxford Economic Papers, Vol. 57, Issue 4, pp. 647-663, 2005
This paper focuses on the effect that population ageing has on the production structure of the economy and consequently on economic growth. We consider an economy that consists of a service sector and a commodity sector. Productivity growth only occurs in the latter sector and is assumed to depend positively on its size. We show that if old agents mainly demand labour-intensive services, the effect of increasing longevity on growth depends on the substitutability of labour and capital in a closed economy. However, ageing unambiguously decreases long-run growth in a small open economy.
JEL Classification: D91; E60; H55; J14; O41Accepted Paper Series
Date posted: February 29, 2008
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