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Population Aging and Comparative Advantage

Author

Listed:
  • Jie Cai

    (University of New South Wales, School of Economics, Australian School of Business)

  • Andrey Stoyanov

    (York University, Department of Economics, Faculty of Liberal Arts and Professional Studies)

Abstract
In this paper we show that demographic di§erences between countries are a source of comparative advantage in international trade. Since many skills are age-dependent, population aging decreases the relative supply and increases the relative price of skills which depreciate with age. Thus, industries relying on skills in which younger workers are relatively more efficient will be more productive in countries with younger labor force and less productive in countries with older populations. Building upon the behavioral and economics literature, we construct industry-level measures of intensities in various age- dependent skills and show that population aging leads to specialization in industries which use age-appreciating skills intensively and erodes comparative advantage in industries for which age-depreciating skills are more important.

Suggested Citation

  • Jie Cai & Andrey Stoyanov, 2015. "Population Aging and Comparative Advantage," Working Papers 2015_1, York University, Department of Economics.
    • Handle: RePEc:yca:wpaper:2015_1
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    References listed on IDEAS

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    More about this item

    Keywords

    trade patterns; comparative advantage; population aging; cognitive skills;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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