Searching for empirical linkages between demographic structure and economic growth

•We identify channels through which demographic structure affects economic growth.•Findings for OECD and non-OECD countries are different.•Demographic transition has a nonlinear effect on economic growth.•Investment, institutions and education are channels for OECD countries.•Investment, financial market and trade are channels for non-OECD countries.

Demographic structure could affect economic growth through many channels. However, little is known about how demographic structure affects economic growth since no study has examined an extensive collection of channels through which demographic structure could affect economic growth in a single context. This paper overcomes this limitation by examining 45 potential mediating variables between demographic structure and economic growth. A causal search algorithm is used to identify channels through which demographic structure affects economic growth. Our results suggest that demographic structure affects economic growth differently between developed and developing countries. For developed countries, we find that an increase in the share of middle-aged workers has a positive effect on economic growth through institutions, investment and education channels. On the other hand, an increase in the share of the senior population has a negative effect on economic growth through institutions and investment channels. For developing countries, we find (but with weak evidence) that an increase in the share of young workers has a negative effect on economic growth through investment, financial market development and trade channels.