Some Macroeconomic Consequences of the Demographic Transition

A PSC Brown Bag Seminar

Ron Lee (University of California, Berkeley, Center for Demography and Economics)

Monday, 10-27-2008.   ARCHIVED EVENT

Location: 6050 ISR Thompson St

Declining mortality followed by declining fertility over the demographic transition initially produce decades of rising child dependency, then decades of improving support ratios as child dependency falls, which raises per capita consumption, other things equal, and finally lead to population aging. Population aging and the forces leading to it can produce not only frightening declines in support ratios, but also very substantial increases in productivity and per capita income by raising physical and human capital intensity. Longer life, lower fertility, and population aging all raise the demand for wealth to provide for old age consumption. This raises capital per worker despite declining aggregate saving rates, unless the increased demand for wealth is met through increased familial or public pension transfers for old age support:
institutions and policies matter. Lower fertility and mortality are associated with higher human capital investment per child, also raising labor productivity. Together, these positive changes will likely outweigh the problems of declining support ratios as population ages. The talk will draw on results from the National Transfer Accounts project to illustrate these points.

PSC Brown Bag seminars highlight recent research in population studies and serve as a focal point for building our research community.

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