Population Ageing, Capital Intensity and Labour Productivity

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Title Population Ageing, Capital Intensity and Labour Productivity
Author Guest, Ross
Journal Name Pacific Economic Review
Editor Kenneth Chan and Yin-Wong Cheung
Year Published 2011
Place of publication Australia
Publisher Wiley-Blackwell Publishing Asia
Abstract This paper analyses the implications of population ageing for the capital intensity of output and, therefore, labour productivity. Population ageing leads to sectoral shifts in demand for goods and services. If such shifts occur between goods that differ in their capital intensity, there will be a change in the average capital intensity of the economy and, therefore, in average labour productivity. In order to gauge the magnitudes of such effects, the present paper reports simulations of a calibrated model with two final goods and two intermediate goods, using data for two Pacific Rim countries for comparison: the United States and Australia. The data for these countries suggest that population ageing will, on average, shift expenditure towards goods with a relatively high capital intensity. The magnitude of the increase in labour productivity according to the simulations is likely to be small, but perhaps not trivial: in the order of 1–4% per annum by 2050. This might partially offset the negative effect of ageing on living standards.
Peer Reviewed Yes
Published Yes
Alternative URI http://dx.doi.org/10.1111/j.1468-0106.2011.00553.x
Volume 16
Issue Number 3
Page from 371
Page to 388
ISSN 1468-0106
Date Accessioned 2012-01-15; 2012-02-14T04:02:33Z
Research Centre Griffith Asia Institute
Faculty Griffith Business School
Subject Macroeconomics (incl Monetary and Fiscal Theory)
URI http://hdl.handle.net/10072/42518
Publication Type Journal Articles (Refereed Article)
Publication Type Code c1

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