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Demographic Change and Policy Responses: Implications for the Global Economy

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  • Rod Tyers
  • Qun Shi

Abstract

The fertility declines associated with the final phase of the global demographic transition have led to slower population growth and accelerated ageing in developed countries and in several advanced developing countries. A global demographic and economic model is used to assess the implications of these changes for population sizes, age-gender distributions, labour force growth and their implications for economic performance. A baseline projection that incorporates declining fertility is compared with a hypothetical constant population growth scenario. The results show that slower population growth and ageing reduces average saving rates in industrial regions, yet global investment demand is also slowed and saving rates rise in developing regions, so there is no net tightening of financial markets. Increased aged labour force participation, considered one solution to the resulting rise in aged dependency in advanced regions, is found to redistribute investment in favour of the industrialised regions and hence to accelerate their per capita income growth, while conferring on the other regions compensatory terms of trade improvements. The alternative of replacement migration is found to require inconceivably large population movements. It also impairs real per capita growth in destination regions but by least in Western Europe, where the terms of trade are improved by the immigration. Copyright 2007 The Authors Journal compilation 2007 Blackwell Publishing Ltd .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal World Economy.

Volume (Year): 30 (2007)
Issue (Month): 4 (04)
Pages: 537-566

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Handle: RePEc:bla:worlde:v:30:y:2007:i:4:p:537-566

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  1. Rod Tyers & Qun Shi, 2007. "Demographic Change and Policy Responses: Implications for the Global Economy," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 30(4), pages 537-566, 04.
  2. Harrigan, James, 1995. "The Volume of Trade in Differentiated Intermediate Goods: Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 283-93, May.
  3. David E. Bloom & Jeffrey G. Williamson, 1997. "Demographic Transitions and Economic Miracles in Emerging Asia," NBER Working Papers 6268, National Bureau of Economic Research, Inc.
  4. James M. Poterba, 2004. "The impact of population aging on financial markets," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, issue Aug, pages 163-216.
  5. Ron Duncan & Qun Shi & Rod Tyers, 2004. "Demographic Change and Demand for Food in Australia," ANU Working Papers in Economics and Econometrics, Australian National University, College of Business and Economics, School of Economics 2004-441, Australian National University, College of Business and Economics, School of Economics.
  6. Grilli, Enzo R & Yang, Maw Cheng, 1988. "Primary Commodity Prices, Manufactured Goods Prices, and the Terms of Trade of Developing Countries: What the Long Run Shows," World Bank Economic Review, World Bank Group, World Bank Group, vol. 2(1), pages 1-47, January.
  7. Rod Tyers & Qun Shi, 2006. "Global Demographic Change, Labour Force Growth and Economic Performance," ANU Working Papers in Economics and Econometrics, Australian National University, College of Business and Economics, School of Economics 2006-462, Australian National University, College of Business and Economics, School of Economics.
  8. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: The Roles of Demographic Change and Investment Risk," ANU Working Papers in Economics and Econometrics, Australian National University, College of Business and Economics, School of Economics 2006-461, Australian National University, College of Business and Economics, School of Economics.
  9. Faini, Riccardo, 2003. "Is the Brain Drain an Unmitigated Blessing?," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  10. Rod Tyers & Ian Bain & Jahnvi Vedi, 2006. "The global implications of freer skilled migration," ANU Working Papers in Economics and Econometrics, Australian National University, College of Business and Economics, School of Economics 2006-468, Australian National University, College of Business and Economics, School of Economics.
  11. Tim Callen & Warwick J. McKibbin & Nicoletta Batini, 2006. "The Global Impact of Demographic Change," IMF Working Papers 06/9, International Monetary Fund.
  12. Lipsey, Robert E., 1994. "Quality change and other influences on measures of export prices of manufactured goods," Policy Research Working Paper Series 1348, The World Bank.
  13. Ronald Lee, 2003. "The Demographic Transition: Three Centuries of Fundamental Change," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 17(4), pages 167-190, Fall.
  14. Kevin J. Stiroh, 2001. "Information technology and the U.S. productivity revival: what do the industry data say?," Staff Reports, Federal Reserve Bank of New York 115, Federal Reserve Bank of New York.
  15. Vernon W. Ruttan, 2002. "Productivity Growth in World Agriculture: Sources and Constraints," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(4), pages 161-184, Fall.
  16. Rees, Lucy & Tyers, Rod, 2004. "Trade reform in the short run: China's WTO accession," Journal of Asian Economics, Elsevier, Elsevier, vol. 15(1), pages 1-31, February.
  17. Ianchovichina, Elena & Robert McDougall, 2000. "Theoretical Structure of Dynamic GTAP," GTAP Technical Papers 480, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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Cited by:
  1. Rod Tyers & Iain Bain & Jahnvi Vedi, 2006. "The global implications of freer skilled migration," PGDA Working Papers, Program on the Global Demography of Aging 1006, Program on the Global Demography of Aging.
  2. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: The Roles of Demographic Change and Investment Premia," PGDA Working Papers, Program on the Global Demography of Aging 1206, Program on the Global Demography of Aging.
  3. Rod Tyers & Qun Shi, 2007. "Demographic Change and Policy Responses: Implications for the Global Economy," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 30(4), pages 537-566, 04.
  4. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: The Roles of Demographic Change and Investment Risk," ANU Working Papers in Economics and Econometrics, Australian National University, College of Business and Economics, School of Economics 2006-461, Australian National University, College of Business and Economics, School of Economics.

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