The limits of human capital: Knowledge-based growth and population decline

Journal of Macroeconomics. 2026. Vol. 4. No. 90. Article 103793.

Skopin V.

This paper studies how population decline affects long-run economic growth through educational expansion in developed economies. It develops a large computable ten-period overlapping generations model with lifelong learning embedded in an R&D-based growth framework. Individuals endogenously allocate time between education, labor, and leisure over the entire life course. Human capital accumulation follows (Lucas, 1988) and incorporates both the opportunity cost of schooling and the class-size effect. The framework decomposes the demographic transition into two components, namely, fertility and longevity, and identifies their separate contributions to educational expansion and economic growth. Calibrated for the G7 countries, the model shows that rising longevity — rather than falling fertility — is the primary driver of post-war educational expansion. Falling fertility alone generates insufficient human capital investment to offset the negative effects of population decline. This leads to a slowdown in technological progress. In combination with rising longevity, however, it is possible to sustain economic growth despite a shrinking population.

Keywords: человеческий капитал, экономический рост, economic growth, сокращение населения, lifelong learning, обучение в течение жизни, human capital, population decline, educational expansion, образовательная экспансия