Abstract
Using panel data for 142 countries for the period from 1960 to 2014, we assess the effects of population aging on economic growth. We find that population aging proxied by old-age population share (or old-age dependency ratio) negatively affects economic growth only when it reaches a certain high level and its negative effects grow stronger as population aging deepens. The nonlinear relationship between population aging and economic growth is associated with the historical nonlinear relationship between the shares of old and working-age population. In the early stages of a demographic shift in most countries, as the old-age population share increases, the working-age population share also tends to increase. Only when the share of old-age population is sufficiently high, the increase in the share of old-age population has coincided with the decline in the share of working age population, thereby having a negative relationship with economic growth. These results can clarify why some previous papers failed to uncover a negative relationship between aging population and economic growth. We also find that population aging has hampered economic growth during more recent years, especially in more aged countries which are mostly developed countries.
| Original language | English |
|---|---|
| Article number | 100963 |
| Journal | Japan and the World Economy |
| Volume | 51 |
| DOIs | |
| Publication status | Published - 2019 Sep 1 |
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Keywords
- Economic growth
- Non-linear effects
- Population aging
ASJC Scopus subject areas
- Finance
- Economics and Econometrics
- Political Science and International Relations
Cite this
Nonlinear effects of population aging on economic growth. / Lee, Hyun Hoon; Shin, Kwanho.
In: Japan and the World Economy, Vol. 51, 100963, 01.09.2019.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Nonlinear effects of population aging on economic growth
AU - Lee, Hyun Hoon
AU - Shin, Kwanho
PY - 2019/9/1
Y1 - 2019/9/1
N2 - Using panel data for 142 countries for the period from 1960 to 2014, we assess the effects of population aging on economic growth. We find that population aging proxied by old-age population share (or old-age dependency ratio) negatively affects economic growth only when it reaches a certain high level and its negative effects grow stronger as population aging deepens. The nonlinear relationship between population aging and economic growth is associated with the historical nonlinear relationship between the shares of old and working-age population. In the early stages of a demographic shift in most countries, as the old-age population share increases, the working-age population share also tends to increase. Only when the share of old-age population is sufficiently high, the increase in the share of old-age population has coincided with the decline in the share of working age population, thereby having a negative relationship with economic growth. These results can clarify why some previous papers failed to uncover a negative relationship between aging population and economic growth. We also find that population aging has hampered economic growth during more recent years, especially in more aged countries which are mostly developed countries.
AB - Using panel data for 142 countries for the period from 1960 to 2014, we assess the effects of population aging on economic growth. We find that population aging proxied by old-age population share (or old-age dependency ratio) negatively affects economic growth only when it reaches a certain high level and its negative effects grow stronger as population aging deepens. The nonlinear relationship between population aging and economic growth is associated with the historical nonlinear relationship between the shares of old and working-age population. In the early stages of a demographic shift in most countries, as the old-age population share increases, the working-age population share also tends to increase. Only when the share of old-age population is sufficiently high, the increase in the share of old-age population has coincided with the decline in the share of working age population, thereby having a negative relationship with economic growth. These results can clarify why some previous papers failed to uncover a negative relationship between aging population and economic growth. We also find that population aging has hampered economic growth during more recent years, especially in more aged countries which are mostly developed countries.
KW - Economic growth
KW - Non-linear effects
KW - Population aging
UR - http://www.scopus.com/inward/record.url?scp=85068508649&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85068508649&partnerID=8YFLogxK
U2 - 10.1016/j.japwor.2019.100963
DO - 10.1016/j.japwor.2019.100963
M3 - Article
AN - SCOPUS:85068508649
VL - 51
JO - Japan and the World Economy
JF - Japan and the World Economy
SN - 0922-1425
M1 - 100963
ER -