Skip to main content


  • Agnieszka Gehringer (a1) and Klaus Prettner (a2)

We analyze the impact of increasing longevity on technological progress within an overlapping generations research and development (R&D)-based growth framework and test the model's implication on Organization for Economic Co-operation and Development (OECD) data from 1960 to 2011. The central hypothesis is that—by raising the incentives of households to invest in physical capital and in R&D—decreasing mortality positively affects technological progress and productivity growth. The empirical results confirm the theoretical prediction. This implies that the demographic changes we observed in industrialized economies over the last decades were not detrimental to economic prosperity, at least as far as technological progress and productivity growth are concerned.

Corresponding author
Address correspondence to: Agnieszka Gehringer, Department of Economics, University of Göttingen, Platz der Göttinger Sieben 3, 37073 Göttingen, Germany; e-mail:
Hide All

We would like to thank the editor, William A. Barnett, an associate editor, an anonymous referee, Cristiano Antonelli, Giuseppe Bertola, James Fenske, Freddy Heylen, Andreas Irmen, Anastasia Litina, Inmaculada Martínez-Zarzoso, Alexia Prskawetz, Russell Thomson, the participants at the Annual Meeting of the German Economic Association 2016, the 1st CREA Workshop on Aging, Culture, and Comparative Development 2016, the MoPAct Workshop on Economic Aspects of Demographic Change 2016, and seminar participants at the University of Göttingen and at the University of Hohenheim for valuable comments and suggestions.

Hide All
Acemoglu, Daron and Johnson, Simon (2007) Disease and development: The effect of life expectancy on economic growth. Journal of Political Economy 115 (6), 925985.
Acemoglu, Daron and Johnson, Simon (2014) Disease and development: A reply to Bloom, Canning, and Fink. Journal of Political Economy 122 (6), 13671375.
Aghion, Philippe and Howitt, Peter (1992) A model of growth through creative destruction. Econometrica 60 (2), 323351.
Aghion, Philippe, Howitt, Peter, and Murtin, Fabrice (2011) The relationship between health and growth: When Lucas meets Nelson-Phelps. Review of Economics and Institutions 2 (1), 124.
Anderson, Theodore W. and Hsiao, Cheng (1982) Formulation and estimation of dynamic models using panel data. Journal of Econometrics 18 (1), 4782.
Arellano, Manuel and Bond, Stephen (1991) Some tests of specification for panel data: Monte carlo evidence and an application to employment equations. Review of Economic Studies 58 (2), 277297.
Barro, Robert J. and Lee, Jong-Wha (2013) A new data set of educational attainment in the world, 1950–2010. Journal of Development Economics 104, 184198.
Ben-Porath, Yoram (1967) The production of human capital and the life cycle of earnings. Journal of Political Economy 75 (4), 352365.
Bernard, Andrew B., Bradford Jensen, J., and Schott, Peter K. (2006) Trade costs, firms and productivity. Journal of Monetary Economics 53 (5), 917937.
Blanchard, Olivier J. (1985) Debt, deficits and finite horizons. Journal of Political Economy 93 (2), 223247.
Bloom, David, Canning, David, and Fink, Günther (2014) Disease and development revisited. Journal of Political Economy 122 (6), 13551366.
Bloom, David, Canning, David, and Fink, Günther (2010) Implications of population ageing for economic growth. Oxford Review of Economic Policy 26 (4), 583612.
Bloom, David, Canning, David, and Graham, Bryan (2003) Longevity and life-cycle savings. Scandinavian Journal of Economics 105 (3), 319338.
Blundell, Richard and Bond, Stephen (1998) Initial conditions and moment restrictions in dynamic panel data methods. Journal of Econometrics 87 (1), 115143.
Borghans, Lex and ter Well, Bas (2002) Do older workers have more trouble using a computer than younger workers? Economics of Skills Obsolescence 21, 139173.
Boucekkine, Raouf, de La Croix, David, and Licandro, Omar (2002) Vintage human capital, demographic trends, and endogenous growth. Journal of Economic Theory 104 (2), 340375.
Boucekkine, Raouf, de La Croix, David, and Licandro, Omar (2003) Early mortality decline at the dawn of modern growth. Scandinavian Journal of Economics 105 (3), 401418.
Brezis, Elise and Ferreira, Rodolphe Dos Santos (2016) Endogenous fertility with a sibship size effect. Macroeconomic Dynamics 20 (8), 20462066.
Bruno, G. S. F. (2005a) Approximating the bias of the LSDV estimator for dynamic unbalanced panel data models. Economics Letters 87, 361366.
Bruno, Giovanni S. F. (2005b) Estimation and inference in dynamic unbalanced panel-data models with a small number of individuals. The Stata Journal 5 (4), 473500.
Bucci, Albert (2008) Population growth in a model of economic growth with human capital accumulation and horizontal R&D. Journal of Macroeconomics 30 (3), 11241147.
Bucci, Alberto (2013) Returns to specialization, competition, population, and growth. Journal of Economic Dynamics and Control 37 (10), 20232040.
Bucci, Alberto and Raurich, Xavier (2017) Population and economic growth under different growth engines. German Economic Review 18 (2), 182211.
Bun, Maurice J. G. and Kiviet, Jan F. (2003) On the diminishing returns of higher order terms in asymptotic expansions of bias. Economics Letters 79 (2), 145152.
Canton, Erik J. F., de Groot, Henri L. F., and Nahuis, Richard (2002) Vested interests, population ageing and technology adoption. European Journal of Political Economy 18 (4), 631652.
Caselli, Francesco, Esquivel, Gerardo, and Lefort, Fernando (1996) Reopening the convergence debate: A new look at cross-country growth empirics. Journal of Economic Growth 1 (3), 363389.
Cass, David (1965) Optimum growth in an aggregative model of capital accumulation. Review of Economic Studies 32 (3), 233240.
Cervellati, Matteo and Sunde, Uwe (2011) Life expectancy and economic growth: The role of the demographic transition. Journal of Economic Growth 16 (2), 99133.
Cervellati, Matteo and Sunde, Uwe (2013) Life expectancy, schooling, and lifetime labor supply: Theory and evidence revisited. Econometrica 81 (5), 20552086.
Chu, Angus C., Cozzi, Guido, and Liao, Chih-Hsing (2013) Endogenous fertility and human capital in a Schumpeterian growth model. Journal of Population Economics 26 (1), 181202.
Crespo-Cuaresma, Jesus, Lábaj, Martin, and Pružinský, Patrik (2014) Prospective ageing and economic growth in Europe. Journal of the Economics of Ageing 3, 5057.
de la Croix, David and Licandro, Omar (1999) Life expectancy and endogenous growth. Economics Letters 65 (2), 255263.
de la Croix, David and Licandro, Omar (2013) The child is father of the man: Implications for the demographic transition. Economic Journal 123, 236261.
Diamond, Peter A. (1965) National debt in a neoclassical growth model. American Economic Review 55 (5), 11261150.
Diene, Mbaye, Diene, Bity, and Azomahou, Théophile T. (2016) Human capital productivity, endogenous growth, and welfare: The role of uncerntainty. Macroeconomic Dynamics 20 (8), 20672092.
Dixit, Avinash K. and Stiglitz, Joseph E. (1977) Monopolistic competition and optimum product diversity. American Economic Review 67 (3), 297308.
Feenstra, Robert C., Inklaar, Robert, and Timmer, Marcel (2013) The next generation of the Penn World Table. Available for download at
Feyrer, James (2007) Demographics and productivity. Review of Economics and Statistics 89 (1), 100109.
Funke, Michael and Strulik, Holger (2000) On endogenous growth with physical capital, human capital and product variety. European Economic Review 44 (3), 491515.
Gehringer, Agnieszka (2013) Financial liberalization, growth, productivity and capital accumulation: The case of European integration. International Review of Economics & Finance 25, 291309.
Gertler, Mark (1999) Government debt and social security in a life-cycle economy. Carnegie-Rochester Conference Series on Public Policy 50, 61110.
Grossman, Gene M. and Helpman, Elhanen (1991) Quality ladders in the theory of economic growth. Review of Economic Studies 58 (1), 4361.
Grossmann, Volker, Steger, Thomas M., and Trimborn, Timo (2013) Dynamically optimal R&D subsidization. Journal of Economic Dynamics and Control 37 (3), 516534.
Gruescu, Sandra (2007) Population Ageing and Economic Growth. Heidelberg: Physica-Verlag.
Ha, Joonkyung and Howitt, Peter (2007) Accounting for trends in productivity and R&D: A Schumpeterian critique of semi-endogenous growth theory. Journal of Money, Credit and Banking 39 (4), 733774.
Hauk, William R. and Wacziarg, Romain (2009) A Monte Carlo study of growth regressions. Journal of Economic Growth 14 (2), 103147.
Heer, Burkhard and Irmen, Andreas (2014) Population, pensions, and endogenous economic growth. Journal of Economic Dynamics and Control 46, 5072.
Heijdra, Ben J. and Mierau, Jochen O. (2010) Growth effects of consumption and labor-income taxation in an overlapping-generations life-cycle model. Macroeconomic Dynamics 14, 151175.
Heijdra, Ben J. and Mierau, Jochen O. (2011). The individual life cycle and economic growth: An essay on demographic macroeconomics. De Economist 159 (1), 6387.
Heijdra, Ben J. and Mierau, Jochen O. (2012). The individual life-cycle, annuity market imperfections and economic growth. Journal of Economic Dynamics and Control 36, 876890.
Heijdra, Ben J., Mierau, Jochen O., and Reijnders, Larie S. M. (2014) A tragedy of annuitization? Longevity insurance in general equilibrium. Macroeconomic Dynamics 18 (7), 16071634.
Heijdra, Ben J. and Reijnders, Laurie (2017) Longevity shocks with age-dependent productivity growth. Journal of Pension Economics and Finance. doi:10.1017/S147474721600024X.
Heijdra, Ben J. and van der Ploeg, Frederick (2002) Foundations of Modern Macroeconomics. Oxford: Oxford University Press.
Heston, Alan, Summers, Robert, and Aten, Bettina (2012). Penn World Table version 7.1, Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania, November 2012.
Hineline, David R. (2008) Parameter heterogeneity in growth regressions. Economics Letters 101, 126129.
Howitt, Peter (1999). Steady endogenous growth with population and R&D inputs growing. Journal of Political Economy 107 (4), 715730.
Irmen, Andreas (2017) Capital- and labor-saving technical change in an aging economy. International Economic Review 58 (1), 261285.
Irmen, Andreas and Litina, Anastasia (2016) Population Aging and Inventive Activity. CESifo working paper no. 5841.
Islam, Nazrul (1995) Growth empirics: A panel data approach. Quarterly Journal of Economics 110 (4), 11271170.
Jones, Charles I. (1995) R&D-based models of economic growth. Journal of Political Economy 103 (4), 759783.
Jones, Charles I. (2002) Sources of U.S. economic growth in a world of ideas. American Economic Review 92 (1), 220239.
Judson, Ruth A. and Owen, Ann L. (1999) Estimating dynamic panel data models: A guide for macroeconomists. Economics Letters 65 (1), 915.
Kalemli-Ozcan, Sebnem (2002) Does the mortality decline promote economic growth? Journal of Economic Growth 7 (4), 411439.
Kalemli-Ozcan, Sebnem (2003) A stochastic model of mortality, fertility, and human capital investment. Journal of Development Economics 70 (1), 103118.
Keller, Wolfgang (2002) Geographic localization of international technology diffusion. American Economic Review 92 (1), 120142.
Kiviet, Jan F. (1995) On bias, inconsistency, and efficiency of various estimators in dynamic panel data models. Journal of Econometrics 68 (1), 5378.
Koopmans, Tjalling C. (1965) On the concept of optimal economic growth. Academiae Scientiarum Scripta Varia 28 (1), 225300.
Kortum, Samuel (1997) Research, patenting and technological change. Econometrica 65 (6), 13891419.
Krueger, Dirk and Ludwig, Alexander (2007) On the consequences of demographic change for rates of returns on capital, and the distribution of wealth and welfare. Journal of Monetary Economics 54, 4987.
Kuhn, Michael and Prettner, Klaus (2016a) Growth and welfare effects of health care in knowledge based economies. Journal of Health Economics 46, 100119.
Kuhn, Michael and Prettner, Klaus (2016b) Increasing Life Expectancy, Optimal Retirement, and Endogenous Growth. Mimeo.
Lindh, Thomas and Malmberg, Bo (1999) Age structure effects and growth in the OECD, 1950–1990. Journal of Population Economics 12 (3), 431449.
Lorentzen, Peter, McMillan, John, and Wacziarg, Romain (2008) Death and development. Journal of Economic Growth 13, 81124.
Maddala, Gangadharrao S. and Wu, Shaowen (2002) Cross-country growth regressions: Problems of heterogeneity, stability and interpretation. Applied Economics 32 (5), 635642.
Mankiw, Gregory N. and Weil, David N. (1989) The baby-boom, the baby-bust and the housing market. Regional Science and Urban Economics 19, 235258.
Miller, Stephen M. and Upadhyay, Mukti P. (2000) The effects of openness, trade orientation, and human capital on total factor productivity. Journal of Development Economics 63, 399423.
Nickell, Stephen S. (1981) Biases in dynamic models with fixed effects. Econometrica 49 (6), 11171126.
Peretto, Pietro F. (1998) Technological change and population growth. Journal of Economic Growth 3 (4), 283311.
Peterson, Peter G. (1999) Gray dawn: The global aging crisis. Foreign Affairs (January/February).
Prettner, Klaus (2013) Population aging and endogenous economic growth. Journal of Population Economics 26 (2), 811834.
Prettner, Klaus and Strulik, Holger (2017) Technology, trade, and growth: The role of education. Macroeconomic Dynamics 20 (5), 13811394.
Prettner, Klaus and Trimborn, Timo (2016) Demographic change and R&D-based economic growth. Economica. doi:10.1111/ecca.12195.
Pritchett, Lant (2001) Where has all the education gone? World Bank Economic Review 15 (3), 367391.
Psacharopoulos, George (1994) Returns to investment in education: A global update. World Development 22 (9), 13251343.
Reinhart, V. R. (1999) Death and taxes: Their implications for endogenous growth. Economics Letters 62 (3), 339345.
Romer, Paul (1990) Endogenous technological change. Journal of Political Economy 98 (5), 71102.
Sachs, Jeffrey D. and Warner, Andrew M. (1997) Fundamental sources of long-run growth. American Economic Review 87 (2), 184188.
Sala-i-Martin, Xavier S. (1997). I Just Ran Four Million Regressions. NBER working paper 6252.
Sala-i-Martin, Xavier S., Doppelhofer, Gernot, and Miller, Ronald I. (2004) Determinants of long-term growth: A Bayesian averaging of classical estimates (BACE) approach. American Economic Review 94 (4), 813835.
Segerström, Paul S. (1998) Endogenous growth without scale effects. American Economic Review 88 (5), 12901310.
Shastry, Gauri K. and Weil, David N. (2003) How much of cross-country income variation is explained by health? Journal of the European Economic Association 1 (2–3), 387396.
Solow, Robert M. (1956) A contribution to the theory of economic growth. The Quarterly Journal of Economics 70 (1), 6594.
Strulik, Holger (2005) The role of human capital and population growth in R&D-based models of economic growth. Review of International Economics 13 (1), 129145.
Strulik, Holger, Prettner, Klaus, and Prskawetz, Alexia (2013) The past and future of knowledge-based growth. Journal of Economic Growth 18 (4), 411437.
The Economist (2004) Demographic change: Old Europe. The Economist. September 30th 2004.
Weil, David N. (2007) Accounting for the effect of health on economic growth. The Quarterly Journal of Economics 122 (3), 12651306.
WHO (2012) Strategy and action plan for healthy ageing in europe, 2012–2020. WHO, Regional Committee for Europe. Available on:
World Bank (2014) World Development Indicators & Global Development Finance Database. Available on:
Yaari, Menahem E. (1965) Uncertain lifetime, life insurance and the theory of the consumer. Review of Economic Studies 32 (2), 137150.
Young, Alwyn (1998). Growth without scale effects. Journal of Political Economy 106 (5), 4163.
Zhang, Jie and Zhang, Junsen (2005) The effect of life expectancy on fertility, saving, schooling and economic growth: Theory and evidence. Scandinavian Journal of Economics 107 (1), 4566.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Macroeconomic Dynamics
  • ISSN: 1365-1005
  • EISSN: 1469-8056
  • URL: /core/journals/macroeconomic-dynamics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *



Full text views

Total number of HTML views: 1
Total number of PDF views: 50 *
Loading metrics...

Abstract views

Total abstract views: 297 *
Loading metrics...

* Views captured on Cambridge Core between 6th September 2017 - 19th July 2018. This data will be updated every 24 hours.