Wealth creation, wealth dilution and demography

Christa N. Brunnschweiler, Pietro F. Peretto, Simone Valente

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)
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Demographic forces are crucial drivers of macroeconomic performance. Yet, existing theories do not allow demography to respond to fundamentals and policies while determining key macroeconomic variables. We build a model of endogenous interactions between fertility and innovation-led productivity growth that delivers empirically consistent co-movements of population, income and wealth. Wealth dilution and wage dynamics stabilize population through non-Malthusian forces; demography determines the ratios of labor income and consumption to financial wealth. Shocks that reduce population size, like immigration barriers, reduce permanently the labor share and the mass of firms, creating prolonged stagnation and substantial intergenerational redistribution of income and welfare.
Original languageEnglish
Pages (from-to)441-459
Number of pages19
JournalJournal of Monetary Economics
Early online date19 Feb 2020
Publication statusPublished - Jan 2021


  • Endogenous fertility
  • Overlapping generations
  • Population level
  • R&D-based growth
  • Wealth dilution

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