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Human capital-based growth with depopulation and class-size effects: theory and empirics

Published online by Cambridge University Press:  31 March 2025

Alberto Bucci Open the ORCID record for Alberto Bucci [Opens in a new window] ,
Lorenzo Carbonari Open the ORCID record for Lorenzo Carbonari [Opens in a new window] ,
Pedro Trivin Open the ORCID record for Pedro Trivin [Opens in a new window]  and
Giovanni Trovato
Alberto Bucci
Affiliation:
ICEA (International Centre for Economic Analysis), and University of Milan, Italy
Lorenzo Carbonari*
Affiliation:
Università degli Studi di Roma “Tor Vergata” and CEIS, Italy
Pedro Trivin
Affiliation:
University of Milan, Italy
Giovanni Trovato
Affiliation:
Università degli Studi di Roma “Tor Vergata”, Italy
*
Corresponding author: Lorenzo Carbonari; Email: [email protected]
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Abstract

Building on Lucas (1988) and Boucekkine et al. (2013), we develop a model in which the impact of population dynamics on per capita GDP and human capital depends on the balance of intertemporal altruism effects toward future generations and class-size effects on an individual’s education investment. We show that there is a critical level of the class-size effects that determines whether a decline in population growth will lead to a decrease or an increase in a country’s long-run growth rate of real per capita income. We take the model to OECD data, using a semi-parametric technique. This allows us to classify countries into groups based on their long-term growth trajectories, revealing patterns not captured by previous studies on the topic.

Keywords

Long-run economic growthdepopulationclass-size effectshuman capital investmentJ11O11O41
Type
Articles
Information
Macroeconomic Dynamics , Volume 29 , 2025 , e91
Copyright
© The Author(s), 2025. Published by Cambridge University Press

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