February 7, 2017

MORE GROWTH, LESS LABOR:

A Challenge to the 'Secular Stagnation' Theory (DAVID HARRISON, Jan 24, 2017, WSJ)

The paper, by Daron Acemoglu of the Massachusetts Institute of Technology and Pascual Restrepo of Boston University, argues aging populations have not had a negative effect on the growth of per-capita gross domestic product. In fact, some aging countries have seen faster growth. The answer, they argue, might have to do with robots.

The economists find that countries where the population over age 50 is growing faster than the 20- to 49-year-old population have been more likely to acquire robots to do a worker's job. Those investments make it easier for firms to replace departing workers even when there are fewer younger workers to take the retirees' place.

Their finding counters the widely discussed "secular stagnation" theory put forward most forcefully by former Treasury Secretary Lawrence Summers, who argues the slowing U.S. workforce growth rate brought about partly by baby-boomer retirements will hold down the country's potential growth.

Posted by at February 7, 2017 7:04 PM

  

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