Journal
JOURNAL OF ECONOMIC THEORY
Volume 104, Issue 2, Pages 340-375Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1006/jeth.2001.2854
Keywords
human capital; longevity; fertility; growth; schooling; retirement
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We study how economic growth is affected by demographics in an OLG model with a realistic survival law. Individuals optimally chose the dates at which they leave school to work and at which they retire. Endogenous growth arises thanks to the accumulation of generation-specific human capital. Favorable shifts in the survival probabilities induce longer schooling and later retirement but have an ambiguous effect on per-capita growth, The long-term relationship between fertility and per-capita growth is hump-shaped. Increases in longevity can be responsible for a switch from a no-growth regime to a sustained growth regime and for a positive relationship between fertility and growth to vanish. Solving numerically the equilibrium, demographic changes can have important medium-term effects even if long-term changes are very small. (C) 2002 Elsevier Science (USA).
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