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POPULATION AGEING, CAPITAL INTENSITY AND LABOUR PRODUCTIVITY
Author(s) -
GUEST ROSS
Publication year - 2011
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2011.00553.x
Subject(s) - economics , productivity , capital intensity , population ageing , capital good , goods and services , population , capital (architecture) , labour economics , ageing , human capital , order (exchange) , capital consumption allowance , capital deepening , demographic economics , economy , capital formation , macroeconomics , economic growth , geography , financial capital , demography , genetics , archaeology , finance , sociology , biology
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.