Working Paper: CEPR ID: DP14026
Authors: Javier Cravino; Andrei A. Levchenko; Marco Rojas
Abstract: We quantify the role of population aging in the structural transformation process. Household-level data from the U.S. show that the fraction of expenditures devoted to services increases with household age. We use a shift-share decomposition and a quantitative model to show that U.S. population aging accounted for about a fifth of the observed increase in the service share in consumption between 1982 and 2016. The contribution of population aging to the rise in the service share is about the same size as the contribution of real income growth, and about half as large as that of changes in relative prices.
Keywords: aging; structural transformation; deindustrialization
JEL Codes: E2; O1; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| population aging (J11) | expenditures on services (H51) |
| population aging (J11) | service share in consumption (D16) |
| real income growth (O49) | service sector growth (O14) |
| changes in relative prices (P22) | service sector growth (O14) |
| population aging (J11) | service sector growth (O14) |