The Baby Boomers and the Productivity Slowdown

51 Pages Posted: 18 Dec 2018 Last revised: 21 Feb 2019

See all articles by Guillaume Vandenbroucke

Guillaume Vandenbroucke

Federal Reserve Banks - Federal Reserve Bank of St. Louis

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Date Written: 2018-12-01

Abstract

The entry of baby boomers into the labor market in the 1970s slowed growth for physical and human capital per worker because young workers have little of both. Thus, the baby boom could have contributed to the 1970s productivity slowdown. I build and calibrate a model a la Huggett et al. (2011) with exogenous population and TFP to evaluate this theory. The baby boom accounts for 75% of the slowdown in the period 1964-69, 25% in 1970-74 and 2% in 1975-79. The retiring of baby boomers may cause a 2.8pp decline in productivity growth between 2020 and 2040, ceteris paribus.

Keywords: Demography, baby boom, aggregate productivity, productivity slowdown, human capital

JEL Classification: E24, J11, J24

Suggested Citation

Vandenbroucke, Guillaume, The Baby Boomers and the Productivity Slowdown (2018-12-01). FRB St. Louis Working Paper No. 2018-37. Available at SSRN: https://ssrn.com/abstract=3303109 or http://dx.doi.org/doi.org/10.20955/wp.2018.037

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