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Demographic change, technological advance, and growth: A cross-country analysis

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  • Park, Cyn-Young
  • Shin, Kwanho
  • Kikkawa, Aiko

Abstract

Population aging presents major policy challenges across the world. However, the impact on economic growth of this demographic trend remains unclear. This paper empirically investigates the impact of population aging on economic growth by considering changes in the entire age distribution of populations of over 170 countries. We find that a rise in older people as a percentage of the general population, alongside a shrinking working-age population, lowers economic growth. We also investigate the effect of technological advances on the relation between population aging and economic growth, using four plausible proxies of technological advancement: life expectancy, labor productivity, automation (robots), and total factor productivity. The analysis suggests that increasing life expectancy, total factor productivity and labor productivity help older age groups contribute more positively to future growth. More automation also benefits old age groups by reducing the old age disadvantage, therefore slowing the decline in their productivity.

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  • Park, Cyn-Young & Shin, Kwanho & Kikkawa, Aiko, 2022. "Demographic change, technological advance, and growth: A cross-country analysis," Economic Modelling, Elsevier, vol. 108(C).
    • Handle: RePEc:eee:ecmode:v:108:y:2022:i:c:s026499932100331x
    DOI: 10.1016/j.econmod.2021.105742
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    Cited by:

    1. Hui Zhang & Jing Li & Tianshu Quan, 2023. "Strengthening or Weakening: The Impact of an Aging Rural Workforce on Agricultural Economic Resilience in China," Agriculture, MDPI, vol. 13(7), pages 1-16, July.
    2. Jiaxin Wang, 2022. "Did China’s “National Sustainable Development Plan of Resource-Based Cities” Promote Economic Growth?," Sustainability, MDPI, vol. 14(13), pages 1-17, July.
    3. Xie, Dongshui & Bai, Caiquan & Zhang, Yuwei, 2023. "Relation-based governance, financial crisis shock, and economic growth in China," Economic Modelling, Elsevier, vol. 129(C).
    4. Houjian Li & Xiaolei Zhou & Mengqian Tang & Lili Guo, 2022. "Impact of Population Aging and Renewable Energy Consumption on Agricultural Green Total Factor Productivity in Rural China: Evidence from Panel VAR Approach," Agriculture, MDPI, vol. 12(5), pages 1-19, May.

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    More about this item

    Keywords

    Demographic change; Life expectancy; Labor productivity; Robotics; Growth;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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