### Abstract

We address the effects of population aging on economic growth, taking account of its growth-delaying effects, through the reduction of capital accumulation and labor force, and the R&D investment reduction due to its lowered return resulting from reduced market size, as well as its growth-promoting effects, through the increase in educational investment due to decrease in the number of child per parent. The policy simulations with a general equilibrium model and its calibration, reflecting the Korean economy, show that: (1) the population aging delays technological progress as well as quantitative economic growth; (2) the government subsidies to R&D and educational investment can partly compensate for the loss in economic growth due to the population aging, but they cannot deal with the problem fundamentally; and (3) the optimal subsidy rates to R&D and education are quite high, ranging from 50 to 70% to R&D and from 70 to 80% to education.

Original language | English |
---|---|

Pages (from-to) | 51-80 |

Number of pages | 30 |

Journal | Korean Economic Review |

Volume | 29 |

Issue number | 1 |

State | Published - 2013 Jul 5 |

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### Keywords

- Educational Investment
- Growth
- Population Aging
- Research and Development

### Cite this

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*Korean Economic Review*, vol. 29, no. 1, pp. 51-80.

**The growth effects of population aging in an economy with endogenous technological progress.** / Chun, Young Jun.

Research output: Contribution to journal › Article

TY - JOUR

T1 - The growth effects of population aging in an economy with endogenous technological progress

AU - Chun, Young Jun

PY - 2013/7/5

Y1 - 2013/7/5

N2 - We address the effects of population aging on economic growth, taking account of its growth-delaying effects, through the reduction of capital accumulation and labor force, and the R&D investment reduction due to its lowered return resulting from reduced market size, as well as its growth-promoting effects, through the increase in educational investment due to decrease in the number of child per parent. The policy simulations with a general equilibrium model and its calibration, reflecting the Korean economy, show that: (1) the population aging delays technological progress as well as quantitative economic growth; (2) the government subsidies to R&D and educational investment can partly compensate for the loss in economic growth due to the population aging, but they cannot deal with the problem fundamentally; and (3) the optimal subsidy rates to R&D and education are quite high, ranging from 50 to 70% to R&D and from 70 to 80% to education.

AB - We address the effects of population aging on economic growth, taking account of its growth-delaying effects, through the reduction of capital accumulation and labor force, and the R&D investment reduction due to its lowered return resulting from reduced market size, as well as its growth-promoting effects, through the increase in educational investment due to decrease in the number of child per parent. The policy simulations with a general equilibrium model and its calibration, reflecting the Korean economy, show that: (1) the population aging delays technological progress as well as quantitative economic growth; (2) the government subsidies to R&D and educational investment can partly compensate for the loss in economic growth due to the population aging, but they cannot deal with the problem fundamentally; and (3) the optimal subsidy rates to R&D and education are quite high, ranging from 50 to 70% to R&D and from 70 to 80% to education.

KW - Educational Investment

KW - Growth

KW - Population Aging

KW - Research and Development

UR - http://www.scopus.com/inward/record.url?scp=84879575808&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:84879575808

VL - 29

SP - 51

EP - 80

JO - Korean Economic Review

JF - Korean Economic Review

SN - 0254-3737

IS - 1

ER -