Dr. Rafael Gómez (London School of Economics)
- Date: 14.12.2007
Time: 11:00 - 12:30
Location: Schackstr. 4/III, Seminar Room 307
International Demography and Your Local Economy ... Or Why Should I Care About How Many Babies Are Born in Tehran?
The presentation will be based on work that Dr. Rafael Gomez is currently engaged in and on the following two working papers:
"Demographic Maturity and Economic Performance: The Effect of Demographic Transitions on Per Capita GDP Growth"
This paper estimates the response of per capita GDP growth to changes in the proportion of mature workers across countries. We define and estimate the effect of demographic maturity in two ways. First, a growing cohort of working age persons (15-64) is found to have a large positive effect on growth of GDP per capita. Second, an increase in the number of prime age workers (35-54) as a fraction of the total working age population (15-64) is found to have a positive but diminishing effect on per capita GDP growth. We find that growth peaks when the ratio of prime age workers over the potentially active population reaches 0.36. Beyond this ratio, diminishing returns set in. Several well known theoretical models of economic growth and labour market performance are consistent with these findings. In particular, the standard life-cycle framework, "Mincerian" earnings equations and personnel economic models of optimal mixes of youth and mature human capital all find confirmation in these estimates.
"The Importance of Being Mature: The Effect of Demographic Maturation on Global Per-Capita Income"
Given that savings and productivity follow a hump shaped profile with respect to age and given that demographic profiles vary across countries, population age structure may be linked to differences in levels of economic development. In this paper we measure the importance of age structure in accounting for differences in per capita income levels and the dispersion of those income levels across countries. We find that even after adjusting for country-specific effects, age structure variation can account for a large portion of differences in per capita income and the lack of sigma convergence observed in cross country data. For the global economy as a whole, we find that demographic maturation has had a strong and positive effect on the evolution of global per capita income since 1960.