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Does demographic change matter for growth?

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  • Liao, Pei-Ju

Abstract

How important is the demographic transition for economic growth? To answer this question, this paper constructs a general equilibrium overlapping generations model with endogenous fertility. The model is calibrated to data from Taiwan, a country that experienced rapid economic growth while undergoing significant demographic transition. Our results suggest that more than one-third of the output growth in Taiwan during the past four decades can be attributed to demographic transition, while TFP growth explains another third and the remainder is mainly due to skill-biased technological progress. Our results show that demographic change is an important driver of the growth process in countries undergoing rapid fertility decline.

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  • Liao, Pei-Ju, 2011. "Does demographic change matter for growth?," European Economic Review, Elsevier, vol. 55(5), pages 659-677, June.
    • Handle: RePEc:eee:eecrev:v:55:y:2011:i:5:p:659-677
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    4. Yeganeh Forouheshfar & Najat El Mekkaoui & Hippolyte d’Albis, 2020. "Demographics in MENA Countries: A Major Driver for Economic Growth," De Economist, Springer, vol. 168(2), pages 183-213, June.
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    6. Krzysztof Makarski & Joanna Tyrowicz & Magda Malec, 2019. "Fiscal and Welfare Effects of Raised Fertility in Poland: Overlapping Generations Model Estimates," Population and Development Review, The Population Council, Inc., vol. 45(4), pages 795-818, December.
    7. Xue, Jianpo & Yip, Chong K., 2017. "One-child policy in China : A unified growth analysis," BOFIT Discussion Papers 22/2017, Bank of Finland, Institute for Economies in Transition.
    8. Jakob B. Madsen & Md. Rabiul Islam & Xueli Tang, 2020. "Was the post-1870 fertility transition a key contributor to growth in the West in the twentieth century?," Journal of Economic Growth, Springer, vol. 25(4), pages 431-454, December.
    9. Aso, Hiroki, 2020. "Differential Fertility, Intergenerational Mobility and the Process of Economic Development," MPRA Paper 106148, University Library of Munich, Germany.
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    12. Kunze, Lars, 2014. "Life expectancy and economic growth," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 54-65.
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    14. Dieu Thanh Le & Hail Park, 2019. "The Impact Of Demographic Change On Economic Growth," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(02), pages 471-484, August.
    15. Aso, Hiroki, 2020. "Demographic transition and Economic development : the role of child costs," MPRA Paper 99966, University Library of Munich, Germany.
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