Working Paper: NBER ID: w26327
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: Population Aging; Structural Transformation; Service Sector; Household Expenditures
JEL Codes: E20; E40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Population aging (J11) | Increase in service share of expenditures (H59) |
| Population aging (J11) | Increase in service shares of value added (O14) |
| Population aging (J11) | Increase in service shares of employment (J68) |
| Population aging (J11) | Increase in consumption expenditures (E20) |
| Changes in age structure of the population (J11) | Increase in service expenditure share (H59) |
| Population aging (J11) | Structural transformation of the economy (O14) |
| Real income growth (O49) | Structural transformation of the economy (O14) |