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Long-run economic growth despite population decline

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  • Strulik, Holger

Abstract

When economic growth is driven by the discovery of new ideas and physical labor is the input in ideas production, population decline inevitably leads to the stagnation of living standards. Here, I reconsider the problem of declining population when ideas are produced by an educated workforce and show that steady positive growth of ideas and income is a plausible outcome. The reason is that the accumulation of human capital offsets the negative effects of population growth. In a general equilibrium model with diminishing returns to education, I show that households generate the constant education effort needed to sustain high economic growth.

Suggested Citation

  • Strulik, Holger, 2024. "Long-run economic growth despite population decline," Journal of Economic Dynamics and Control, Elsevier, vol. 168(C).
    • Handle: RePEc:eee:dyncon:v:168:y:2024:i:c:s0165188924001350
    DOI: 10.1016/j.jedc.2024.104943
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    More about this item

    Keywords

    Long-run growth; Innovation; Fertility; Education; Demographic transition;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • 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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