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Serving the old: ageing and economic growth

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  • Bas van Groezen
  • Lex Meijdam
  • Harrie A. A. Verbon

Abstract

This paper focuses on the effect that population ageing has on the production structure of the economy and consequently on economic growth. We consider an economy that consists of a service sector and a commodity sector. Productivity growth only occurs in the latter sector and is assumed to depend positively on its size. We show that if old agents mainly demand labour-intensive services, the effect of increasing longevity on growth depends on the substitutability of labour and capital in a closed economy. However, ageing unambiguously decreases long-run growth in a small open economy. Copyright 2005, Oxford University Press.

Suggested Citation

  • Bas van Groezen & Lex Meijdam & Harrie A. A. Verbon, 2005. "Serving the old: ageing and economic growth," Oxford Economic Papers, Oxford University Press, vol. 57(4), pages 647-663, October.
    • Handle: RePEc:oup:oxecpp:v:57:y:2005:i:4:p:647-663
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    Citations

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    Cited by:

    1. Partha Sen, 2023. "Social security reform and welfare in a two sector model," The Japanese Economic Review, Springer, vol. 74(2), pages 233-249, April.
    2. Momota, Akira, 2012. "Population aging and sectoral employment shares," Economics Letters, Elsevier, vol. 115(3), pages 527-530.
    3. Frederick van der Ploeg, 2007. "Sustainable Social Spending and Stagnant Public Services: Baumol's Cost Disease Revisited," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(4), pages 519-547, December.
    4. Mirela Cristea & Graţiela Georgiana Noja & Cecilia-Nicoleta Jurcuţ & Constantin Ştefan Ponea & Elena Sorina Caragiani & Alin Viorel Istodor, 2021. "The Interplay between Public Health, Well-Being and Population Aging in Europe: An Advanced Structural Equation Modelling and Gaussian Network Approach," IJERPH, MDPI, vol. 18(4), pages 1-20, February.
    5. Stijepic, Denis & Wagner, Helmut, 2009. "Population-ageing, structural change and productivity growth," MPRA Paper 37005, University Library of Munich, Germany, revised 29 Feb 2012.
    6. Makoto Hirono, 2021. "Demographic change, human capital accumulation, and sectoral employment," Journal of Economics, Springer, vol. 132(2), pages 165-185, March.
    7. Luciano Fanti & Luca Gori, 2010. "A two-sector overlapping generations economy: economic growth and multiple equilibria," Discussion Papers 2010/100, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    8. Peter Mayerhofer & Matthias Firgo & Stefan Schönfelder, 2015. "Vierter Bericht zur internationalen Wettbewerbsfähigkeit Wiens," WIFO Studies, WIFO, number 60625.
    9. Sheng, Jichuan & Ding, Rui & Yang, Hongqiang, 2024. "Corporate green innovation in an aging population: Evidence from Chinese listed companies," Technological Forecasting and Social Change, Elsevier, vol. 202(C).
    10. Oliwia Komada, 2015. "Children as a public good in PAYG pension system," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 43.
    11. Sarah Harper, 2013. "Population–Environment Interactions: European Migration, Population Composition and Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(4), pages 525-541, August.
    12. Akira Yakita, 2012. "Different demographic changes and patterns of trade in a Heckscher–Ohlin setting," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 853-870, July.
    13. Fanti, Luciano & Gori, Luca, 2009. "A two-sector OLG economy: economic growth and demographic behaviour," MPRA Paper 18869, University Library of Munich, Germany.
    14. Katerina Koka, 2015. "The Impact of the Population Age Structure on the Response to Negative Asset Shocks," Economics Bulletin, AccessEcon, vol. 35(4), pages 2270-2281.
    15. Andrea Kunnert & Oliver Fritz & Dieter Pennerstorfer & Gerhard Streicher & Birgit Aigner & Thomas Döring, 2010. "Teilbericht 3: Alterung und regionale Wettbewerbsfähigkeit," WIFO Studies, WIFO, number 41128.
    16. Bas Van Groezen & Lex Meijdam & Harrie A. A. Verbon, 2007. "Increased Pension Savings: Blessing or Curse? Social Security Reform in a Two‐Sector Growth Model," Economica, London School of Economics and Political Science, vol. 74(296), pages 736-755, November.

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