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Impact of educational investments on economic losses from population ageing using an interregional CGE-population model

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  • Kim, Euijune
  • Hewings, Geoffrey J.D.
  • Lee, Changkeun

Abstract

This paper uses an interregional CGE-Population model of Korea to estimate the regional effects of population ageing on the economic losses from 2015 to 2060. The model accounts for the economic behavior of producers and consumers on the real side economies of two regions: the Seoul Metropolitan Area and the rest of Korea. Population demographics are disaggregated into eight age cohorts, and each age group has different parameters and values for labor productivity and participation rates in the labor market on the supply side and saving rates and consumption behaviors on the demand side. The ageing trend could cause a reduction in the GDP by 0.92% on average, but the damage could be compensated for through an additional increase in educational investments in the 20–29 age cohort by 4% for at least 10 consecutive years. However, the investment policy has a negative impact on the regional income distribution due to different elasticity values of education by age cohort with respect to human capital productivity.

Suggested Citation

  • Kim, Euijune & Hewings, Geoffrey J.D. & Lee, Changkeun, 2016. "Impact of educational investments on economic losses from population ageing using an interregional CGE-population model," Economic Modelling, Elsevier, vol. 54(C), pages 126-138.
    • Handle: RePEc:eee:ecmode:v:54:y:2016:i:c:p:126-138
    DOI: 10.1016/j.econmod.2015.12.015
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    2. Li, Wei & Lu, Can & Ding, Yi & Zhang, Yan-Wu, 2017. "The impacts of policy mix for resolving overcapacity in heavy chemical industry and operating national carbon emission trading market in China," Applied Energy, Elsevier, vol. 204(C), pages 509-524.
    3. Martin Stepanek, 2022. "Sectoral Impacts of International Labour Migration and Population Ageing in the Czech Republic," Computational Economics, Springer;Society for Computational Economics, vol. 60(2), pages 375-400, August.
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    5. Euijune Kim & Seung‐Woon Moon & Yoojin Yi, 2021. "Analyzing spillover effects of development of Asian highway on regional growth of Northeast Asian countries," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1243-1266, August.
    6. Euijune Kim & Seung-Woon Moon & Shigemi Kagawa, 2019. "Spatial economic linkages of economic growth and air pollution: developing an air pollution-multinational CGE model of China, Japan, and Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 63(2), pages 255-268, October.

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