title: Population Aging and the Direction of Technical Change
creator: Irmen, Andreas
subject: 330
subject: 330 Economics
description: An analytical framework is developed to study the repercussions between endogenous capital- and labor-saving technical change and population aging. Following an intuition often attributed to Hicks (1932), I ask whether and how population aging aff ects the relative scarcity of factors of production, relative factor prices, and the direction of induced technical change. Aging is equivalent to an increase in the old-age dependency ratio of an OLG-economy with two-period lived individuals. In this framework aging increases the relative scarcity of labor with respect to capital. Therefore, there will be more labor- and less capital-saving technical change. Unless there are contemporaneous knowledge spillovers across innovating firms technical change induced by a small increase in the old-age dependency ratio has no  first-order effect on current GDP. The presence of capital-saving technical change is shown to imply that the economy's steady-state growth rate is independent of its age structure. 
date: 2009
type: Working paper
type: info:eu-repo/semantics/workingPaper
type: NonPeerReviewed
format: application/pdf
identifier: https://archiv.ub.uni-heidelberg.de/volltextserverhttps://archiv.ub.uni-heidelberg.de/volltextserver/10172/1/irmen_2009_dp493.pdf
identifier: DOI:10.11588/heidok.00010172
identifier: urn:nbn:de:bsz:16-opus-101722
identifier:   Irmen, Andreas  (2009) Population Aging and the Direction of Technical Change.  [Working paper]     
relation: https://archiv.ub.uni-heidelberg.de/volltextserver/10172/
rights: info:eu-repo/semantics/openAccess
rights: http://archiv.ub.uni-heidelberg.de/volltextserver/help/license_urhg.html
language: eng