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Duke Economics Working Paper #03-09
This paper develops a flexible framework for the modeling of population's role in economic growth by assessing and then extending a rendering suggested in a series of articles by several Harvard economists. Our framework includes two separable models, designated alternatively as "productivity" and "translations" models. The first models output-per-worker growth while the second "translates" that growth from per-worker into per-capita terms. We then specify a core economic model and estimate several alternative demographic specifications using a cross-country panel spanning the period 1960-1995. The most comprehensive rendering includes population and working-age growth rates in the translations model, and more direct demographic impacts like population size, dependency, and density in the productivity model. The results reveal a purely accounting role for the translations variables, corroborating the separability of the two components. By contrast, other demographic variables, most notably youth dependency, play a distinct and independent role in the productivity model. Such a preferred rendering shows that worldwide, favorable impacts of demographic change have explained around 10% of variations in economic growth within the productivity model with an approximately equivalent contribution due to translating the results into per-capita terms. This synthesis framework helps to clarify the various channels through which demographic change impacts economic growth by exposing both its economic-productivity and welfare impacts. More generally, the framework allows for the articulation of alternative economic and translations models.
Keywords: demography, convergence, growth
JEL: O11, J1, O4
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35 pages