Demographic structure and capital accumulation

This paper develops an overlapping generations model to analyze the consequences of demographic structure changes induced by an exogenous shift in the birth rate. We …rst show that a …nite growth rate of the population that maximizes long-run capital per capita exists. Then, we examine the theoretical properties of this growth rate by showing that: (i) it corresponds to the demographic structure such that the average ages of capital holders and workers are equal; (ii) it is associated to an e¢ cient steady state; (iii) it increases with compulsory transfers from younger to older generations. Finally, we explain why standard overlapping generations models do not exhibit such a growth rate. JEL Classi…cation: D91; E13; J10