Human Capital-based Growth with Depopulation and Class-size Effects: Theory and Empirics

37 Pages Posted: 1 May 2024

See all articles by Alberto Bucci

Alberto Bucci

University of Milan - Department of Business Policy and Economics

Lorenzo Carbonari

Università di Roma "Tor Vergata"

Giovanni Trovato

University of Rome Tor Vergata - Faculty of Economics

Pedro Trivin

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM)

Date Written: April 30, 2024

Abstract

Building on Lucas (1988), we develop a model in which the impact of population dynamics on per capita GDP and human capital depends on the balance of intertemporal altruism effects towards future generations and class-size effects on an individual’s education investment. We show that there is a critical level of the class-size effect that determines whether a decline in population growth will lead to a decrease or an increase in a country’s long-run growth rate of real per capita income. We take the model to OECD data, using a semi-parametric technique. This allows us to classify countries into groups based on their long-term growth trajectories, revealing patterns not captured by previous studies on the topic.

Keywords: Long-run economic growth; Depopulation; Class-size effects; Human capital investment

JEL Classification: J11, O11, O41

Suggested Citation

Bucci, Alberto and Carbonari, Lorenzo and Trovato, Giovanni and Trivin, Pedro, Human Capital-based Growth with Depopulation and Class-size Effects: Theory and Empirics (April 30, 2024). CEIS Working Paper No. 575, Available at SSRN: https://ssrn.com/abstract=4811934 or http://dx.doi.org/10.2139/ssrn.4811934

Alberto Bucci

University of Milan - Department of Business Policy and Economics ( email )

Via Mercalli, 23
20122-Milano
Italy
+39(0)2 50321.463 (Phone)
+39(0)2 50321.505 (Fax)

Lorenzo Carbonari (Contact Author)

Università di Roma "Tor Vergata" ( email )

Via Columbia 2
Roma, Lazio 00133
Italy

Giovanni Trovato

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

Pedro Trivin

University of Milan - Department of Economics, Management and Quantitative Methods (DEMM) ( email )

Via Conservatorio, 7
Milan, 20122
Italy

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