The Effect of Seniority on Economic Growth

Economic growth is the most important parameter to determine progress and the rate of development in every country. Man power is considered as an important parameter in all models of economic growth. Therefore, demographic variables play an important role in the economic growth of countries. During recent decades, demographic variables have experienced large fluctuations in Iran. Baby-boom in 60s, considerable decrease in the rate of fertility in 70s and its continuation and intensification in 80s has led to change in age structure of the country. The present paper seeks to examine the effect of these changes on economic growth. To this end, national product in considered as a function of capital and labor force and is estimated on the basis of Cobb-Douglas production function and ordinary least squares (OLS) method. The results indicate that capital and active labor force has a positive effect on economic growth and retired labor force has a negative effect on it. If seniority increases one percent, the economic growth, on average, will decrease 0.01, given that other conditions are fixed.