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

Author

Listed:
  • Alberto Bucci

    (International Centre for Economic Analysis; Department of Economics, Management and Quantitative Methods, University of Milan, Italy)

  • Lorenzo Carbonari

    (Dipartimentio di Economia e Finanza, Università degli Studi di Rome “Tor Vergata”, Italy)

  • Giovanni Trovato

    (ipartimentio di Economia e Finanza, Università degli Studi di Rome “Tor Vergata”, Italy)

  • Pedro Trivin

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

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.

Suggested Citation

  • Alberto Bucci & Lorenzo Carbonari & Giovanni Trovato & Pedro Trivin, 2024. "Human Capital-based Growth with Depopulation and Class-size Effects: Theory and Empirics," Working Paper series 24-05, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:24-05
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    Keywords

    Long-run economic growth; Depopulation; Class-size effects; Human capital investment;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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