Human Capital and Labor Productivity: Policy Implications of Changing Age-Structures in Five Sub-Saharan African Countries

Marlene A. Lee, Population Reference Bureau
Joshua K. Wilde, Max Planck Institute for Demographic Research (MPIDR)
Mahesh Karra, Boston University

The Canning-Karra-Wilde (CKW) model explicitly incorporates age-structure change into dynamics of the economic production function and simulates economic output under high fertility and endogenous low-fertility regimes (Karra, Canning, & Wilde, 2017). In this paper, we take advantage of the human capital adjustment that is included in the model’s structure to show the trajectory of labor productivity over time under these scenarios. We use the model to quantify cost of failure to adequately invest in education during the age-restructuring of the population. Finally, we consider, relative to estimated economic growth and in light of digital technologies showing promise for African countries, the cost of community health programs that could produce the endogenous low-fertility scenario. Our paper demonstrates the usefulness of the CKW model in illustrating the effects of policy levers inherent in the model’s underlying economic production function and contributes to better understanding specifications of age-structure change in demographic dividend models.