Demographics and the Evolution of Trade Imbalances

59 Pages Posted: 18 Oct 2019

See all articles by Michael Sposi

Michael Sposi

Southern Methodist University (SMU)

Date Written: October 8, 2019


The age distribution evolves asymmetrically across countries, influencing relative saving rates and labor supply. Using a dynamic, multicountry trade model I quantify how demographic changes affected trade imbalances across 28 countries since 1970. Counterfactually holding demographics constant reduces net exports in emerging economies that experienced rising working age shares, and boosts them in advanced economies that experienced flatter, or declining, working age shares. This helps alleviate the allocation puzzle. On average, a one percentage point increase in a country's working age share, relative to the world, increased its ratio of net exports to GDP by one-third of a percentage point.

Keywords: Demographics, Trade imbalances, Dynamics, Labor supply

JEL Classification: F11, F21, J11

Suggested Citation

Sposi, Michael, Demographics and the Evolution of Trade Imbalances (October 8, 2019). Available at SSRN: or

Michael Sposi (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

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