Does age structure forecast economic growth?

Increases in the proportion of the working age population can yield a “demographic dividend” that enhances the rate of economic growth. We estimate the parameters of an economic growth model using a cross section of countries over the period 1960 to 1980, and investigate whether the inclusion of age structure improves the model's forecasts for the period 1980 to 2000. We find that including the age structure improves the forecast, although there is evidence of parameter instability between periods with an unexplained growth slowdown in the second period. We use the model to generate growth forecasts for the period 2000 to 2020.