Demographic Bonus, Productivity, and Economic Growth

This document analyzes the relationship between changes in Peru’s demographic structure and GDP growth, both per capita and per worker. It finds that the demographic factor contributed 0.4 percentage points (p.p.) to annual per capita GDP growth during the 2000–2019 period. Furthermore, a 5 p.p. increase in the labor force participation rate from the 30–39 age group to the 40–54 age group would increase output per worker by 10 percent, given their accumulated experience. For the 2010–2020 period, the change in the age structure of the labor force would have contributed an additional 0.04 p.p. annually to labor productivity growth. Consequently, the overall contribution of demographic changes to GDP per capita—through the direct impact of the demographic factor and its contribution to labor productivity—would have been 0.24 percentage points per year during the 2010–2020 period, and would be 0.13 percentage points during the 2020–2030 period. Finally, the conditions under which Peru is experiencing the demographic dividend could be better when compared to those of developed countries that have already benefited from such demographic shifts. Thus, it is a priority to implement structural reforms that improve these conditions and allow for better utilization of the demographic dividend.