Demographic Change, Human Capital and Endogenous Growth

Ludwig, Alexander ; Schelkle, Thomas ; Vogel, Edgar

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URL:	https://ub-madoc.bib.uni-mannheim.de/1627
URN:	urn:nbn:de:bsz:180-madoc-16279
Document Type:	Working paper
Year of publication:	2007
The title of a journal, publication series:	MEA Discussion Papers
Volume:	151
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series:	Veröffentlichungen des MEA (Mannheim Research Institute For the Economics of Aging) > MEA Discussion Papers
Subject:	300 Social sciences, sociology, anthropology
Classification:	JEL: J24 J11 C 68 D33 E25 E17 ,
Subject headings (SWD):	Mehrgenerationenmodell , Humankapital , Bevölkerungsentwicklung , Soziale Wohlfahrt
Keywords (English):	population aging , human capital , endogeous growth , heterogenous agents , distrubtion of welfare
Abstract:	This paper employs a large scale overlapping generations (OLG) model with endogenous education to evaluate the quantitative role of human capital adjustment for the economic consequences of demographic change. We find that endogenous human capital formation is an important adjustment mechanism which substantially mitigates the macroeconomic impact of demographic change. Welfare gains from demographic change for newborn households are approximately three times higher when households endogenously adjust their education. Low ability agents experience higher welfare gains. Endogenous growth through human capital formation is found to increase the long-run growth rate in the economy by 0.2-0.4 percentage points.