Working Paper: CEPR ID: DP14092
Authors: Juan Jimeno; Henrique S. Basso
Abstract: Demographic changes and a new wave of innovation and automation are two main structural trends shaping the macroeconomy in the next decades. We present a general equilibrium model with a tractable life-cycle structure that allows the investigation of the main transmission mechanisms by which demography and technology affect economic growth. Due to a trade-off between innovation and automation, lower fertility and population ageing lead to a reduction in GDP per capita growth and the labour income share. Assuming different labour market configurations and scenarios for the integration of robots in economic activity only partially compensate for these effects.
Keywords: Population ageing; Automation; Innovation
JEL Codes: O31; O40; J11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| decrease in fertility (J13) | lower GDP per capita growth (O49) |
| lower labor supply growth (J20) | decrease in innovation (O39) |
| aging population (J14) | lower labor income share (E25) |
| automation (L23) | lower labor income share (E25) |
| automation (L23) | reallocation of resources away from innovation (O39) |
| demographic changes (J11) | decline in real interest rates (E43) |
| demographic changes (J11) | decline in labor income share (E25) |