Growth and Longevity from the Industrial Revolution to the Future of an Aging Society

CORE Discussion Paper No. 2006/64

34 Pages Posted: 20 Sep 2006

See all articles by David de la Croix

David de la Croix

Catholic University of Louvain (UCL) - Institut de Recherches Economiques et Sociales (IRES); Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Thomas Lindh

Uppsala University - Department of Economics

Bo Malmberg

Uppsala University - Institute for Housing and Urban Research

Date Written: July 2006

Abstract

Aging of the population will affect the growth path of all countries. To assess the historical and future importance of this claim we use two popular approaches and evaluate their merits and disadvantages by confronting them to Swedish data. We first simulate an endogenous growth model with human capital linking demographic changes and income growth. Rising longevity increases the incentive to get education, which in turn has ever-lasting effects on growth through a human capital externality. Secondly, we consider a reduced-form statistical model based on the demographic dividend literature. Assuming that there is a common DGP guiding growth through the demographic transition, we use an estimate from post-war global data to backcast the Swedish historical GDP growth. Comparing the two approaches, encompassing tests show that each of them contains independent information on the Swedish growth path, suggesting that there is a benefit from combining them for long-term forecasting.

Keywords: Demographic Transition, Life Expectancy, Education, Income Growth

JEL Classification: J11, O41, I20, N33

Suggested Citation

de la Croix, David and Lindh, Thomas and Malmberg, Bo, Growth and Longevity from the Industrial Revolution to the Future of an Aging Society (July 2006). CORE Discussion Paper No. 2006/64, Available at SSRN: https://ssrn.com/abstract=931593 or http://dx.doi.org/10.2139/ssrn.931593

David De la Croix (Contact Author)

Catholic University of Louvain (UCL) - Institut de Recherches Economiques et Sociales (IRES) ( email )

3, Place Montesquieu
Louvain-la-Neuve, 1348
Belgium
+32 10 47 3945 (Fax)

HOME PAGE: http://www.de-la-croix.be

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Thomas Lindh

Uppsala University - Department of Economics ( email )

Box 513
SE-75120 Uppsala
Sweden
+46-18-471 1103 (Phone)
+46-18-471 14 78 (Fax)

Bo Malmberg

Uppsala University - Institute for Housing and Urban Research ( email )

S-801 29 Gavle
Sweden
+46-26-4206512 (Phone)
+46-26-4206501 (Fax)

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