Influence of Workforce Ageing on Human Capital Formation

Stonawski, M. (2008). Influence of Workforce Ageing on Human Capital Formation. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-08-005

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Abstract

This paper addresses the question of how workforce ageing influences human capital formation, human capital deterioration, and future productivity growth. The method presented in this paper focuses on the magnitude of human capital that has been accumulated in an individual. It takes into consideration education, acquiring knowledge and experience, knowledge becoming obsolete or forgotten, as well as the impact of health. The estimated human capital curve (based on the net effect of the various determinants of human capital) has an inverted U-shaped profile. The consequences of workforce ageing can be considered in the short and long term. In the short term, the accumulated human capital could increase if well-educated workers from large cohorts reach the age at which their human capital is the highest. However, in the long term, a decrease in aggregate human capital is expected because the working-age population shrinks. This could also affect economic growth levels in the future.

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