Economic growth with human, physical, and automation capital: The role of population decline

We examine the long-run economic consequences of population decline when automation and education respond endogenously to the demographic challenge. We show that, despite negative population growth, positive per capita output growth can be sustained. In equilibrium, output grows in line with physical and human capital accumulation, with household saving behavior playing a central role in sustaining growth. Moreover, the income share of raw labor declines, whereas the share of human capital remains constant.