This project studies the role of new cohorts and their characteristics in driving economic growth and the associated process of structural transformation. We harmonise and combine micro-level surveys from many countries at different levels of development to construct a novel cohort-level dataset including information on income, education, labour force participation by gender, self-employment, occupation, and sector of employment. This data infrastructure allows us to systematically quantify the statistical contribution of the entry of new cohorts for two key aggregate trends associated with development: growth in average income and structural transformation in the occupational structure.
In both cases, we find a substantial role for cohort effects. To a large extent, growth and structural transformation are driven by differences across cohorts, as opposed to changes for given cohorts over their life cycle. A key mechanism behind this result is the higher human capital of more recent cohorts. These findings suggest that policies that improve the opportunities for young cohorts to acquire skills and exploit their comparative advantage are likely to generate important aggregate effects.
