Population growth,age structure,and age-specific productivity

Motivated by empirical evidence that fluctuations in age structure affect relative wages across age groups, this paper asks whether there is a steady-state age distribution that maximizes the lifetime wages of a representative worker. The paper proves the surprising result that in a pure labor economy with any constant returns technology, a uniform age distribution minimizes lifetime wages. Skewed age distributions, generated by either positive or negative population growth rates, generate unambiguously higher lifetime wages than a stationary population, in spite of possible reductions in per capita output in every period. The presence of non-labor factors complicates, but does not necessarily reverse, this result. The paper relates the beneficial effects of higher rates of population growth on lifetime wages in a pure labor economy with imperfect substitutability across age groups to the benefits of population growth that appear in overlapping-generation consumption loan models with intergenerational transfers.A previous version of this paper was presented at the Economic Demography Workshop at the 1988 meetings of the Population Association of America. Helpful comments from Mark Berger, Theodore Bergstrom, Ronald Lee, Hal Varian, and Robert Willis are acknowledged.