Population aging and comparative advantage

In this paper we show that demographic differences between countries are a source of comparative advantagein international trade. Since many skills are age-dependent, population aging decreases the relativesupply and increases the relative price of skills which depreciate with age. Thus, industries relying on skillsin which younger workers are relatively more efficient will be more productive in countries with a youngerlabor force and less productive in countries with an older population. Building upon the neuroscienceand economics literature, we construct industry-level measures of intensities in various age-dependentskills and show that population aging leads to specialization in industries which use age-appreciating skillsintensively and erodes comparative advantage in industries for which age-depreciating skills are moreimportant