Demographic change,human capital accumulation and R&D‐based growth

Employing an overlapping generations model of R&D‐based growth with endogenous fertility and education decisions, we examine how demographic changes induced by an increase in life expectancy influence the long‐run growth rate of the economy. We demonstrate that life expectancy, when relatively low (high), positively (negatively) affects economic growth. This paper also compares the growth implications of child education subsidy policies (i.e., policies for enhancing basic education) and child rearing subsidy policies (i.e., pro‐natal policies) and demonstrate that while the child education subsidies consistently foster economic growth, child rearing subsidies may negatively affect economic growth.