Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital
Anne Edle von Gaessler & Thomas Ziesemer
#2017-043
We modify a Lucas-type endogenous growth model to contain endogenous
labour supply, imperfect international capital movements, and estimated
interest and education time functions. Solutions based on realistic
calibrations show that (i) the rate of human capital depreciation
through ageing has a much stronger negative impact on growth than
further changes in the population growth rate or the Frisch elasticity
of labour supply; (ii) a higher rate of human capital depreciation, a
higher growth rate of the dependency ratio, and lower past cumulated
savings all go together with a higher second-best education time and
higher growth; (iii) demographic dividends are positive in the short run
but negative in the long run.
JEL Classification: F43, J11, 24; O11, O33, O41
Keywords: Ageing, human capital, endogenous growth, open economy,
serendipity theorem