Demographic change, human capital accumulation, and sectoral employment

Many studies examine the relationship between aging and economic growth; however, only a few theoretical studies find a possible non-linear relationship. Thus, this study theoretically investigates the impact of population aging on economies. We construct a three-period overlapping generations model with two sectors: non-education and education. We assume that learning-by-doing effects compound as the share of employment increases and improves productivity. Both adults and old agents consume non-education goods and services, while only adults demand education services for their children to gain human capital. Our results demonstrate that whether an increase in life expectancy positively or negatively influences income growth per capita depends on the productivity of the non-education and education sectors.