The Baby Boomers and the Productivity Slowdown

Vandenbroucke, Guillaume

doi:doi.org/10.20955/wp.2018.037

Working Paper

The Baby Boomers and the Productivity Slowdown

Abstract: The entry of baby boomers into the labor market in the 1970s slowed growth for physical and human capital per worker because young workers have little of both. Thus, the baby boom could have contributed to the 1970s productivity slowdown. I build and calibrate a model a la Huggett et al. (2011) with exogenous population and TFP to evaluate this theory. The baby boom accounts for 75% of the slowdown in the period 1964-69, 25% in 1970-74 and 2% in 1975-79. The retiring of baby boomers may cause a 2.8pp decline in productivity growth between 2020 and 2040, ceteris paribus.

Keywords: Demography; baby boom; aggregate productivity; productivity slowdown; human capital;

JEL Classification: E24; J11; J24;

https://doi.org/doi.org/10.20955/wp.2018.037