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Impact of Population and Workforce Aging on Economic Growth: Case Study of Taiwan

Author

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  • Wen-Hsin Huang

    (Department of Accounting Information, National Taichung University of Science and Technology, Taichung 400-439, Taiwan)

  • Yen-Ju Lin

    (Department of Public Finance and Taxation, National Taichung University of Science and Technology, Taichung 400-439, Taiwan)

  • Hsien-Feng Lee

    (Department of Economics, National Taiwan University, Taipei 100-116, Taiwan)

Abstract

Taiwan’s population is aging at a fast pace, and its aged society is expected to transition into a hyper-aged society within eight years. Population aging has been a matter of international concern; however, there remain differing views about its economic impact. Thus, this study aims to examine the impact of population and workforce aging on Taiwan using quarterly data from 1981–2017. The empirical results demonstrate that an aging workforce has a significantly positive impact on the rate of economic growth. However, the old-age dependency ratio has a significantly negative effect on economic growth. The empirical findings indicate that human capital is essential for total factor productivity (TFP) growth and that workforce and population aging mainly impact productivity through TFP. Accounting for policy factors, increasing the supply of the eldercare workforce and foreign manpower contribute toward countering the negative impact of an aging population on national economic growth. Policies on retirement, pension systems, health care, and human capital accumulation that target the aged population are discussed, accompanied by policy suggestions.

Suggested Citation

  • Wen-Hsin Huang & Yen-Ju Lin & Hsien-Feng Lee, 2019. "Impact of Population and Workforce Aging on Economic Growth: Case Study of Taiwan," Sustainability, MDPI, vol. 11(22), pages 1-13, November.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:22:p:6301-:d:285254
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    Cited by:

    1. Chu, Chin-Peng & Yeh, Kuo-Chun, 2021. "Demographic Transition for Economic Development in Taipei,China: Literature and Policy Implications," ADBI Working Papers 1222, Asian Development Bank Institute.
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    3. Miao Zhang & Shibing You & Li Zhang & Houli Zhang & Yukun Wang, 2023. "Dynamic Analysis of the Effects of Aging on China’s Sustainable Economic Growth," Sustainability, MDPI, vol. 15(6), pages 1-16, March.
    4. Huang, Yi-Hou & Liang, Woan-lih & Truong, Quang-Thai & Wang, Yanzhi, 2022. "No new tricks for old dogs? Old directors and innovation performance," Technological Forecasting and Social Change, Elsevier, vol. 179(C).
    5. Chen, Chien-Hsun, 2023. "Taiwan’s Rapidly Aging Population: A Crisis in the Making?," MPRA Paper 116543, University Library of Munich, Germany.
    6. Tzen-Ying Ling & Hsien-Tsung Lu & Yen-Pin Kao & Szu-Cheng Chien & Hung-Chou Chen & Li-Fong Lin, 2023. "Understanding the Meaningful Places for Aging-in-Place: A Human-Centric Approach toward Inter-Domain Design Criteria Consideration in Taiwan," IJERPH, MDPI, vol. 20(2), pages 1-21, January.
    7. Goh, Soo Khoon & Wong, Koi Nyen & McNown, Robert & Chen, Li-Ju, 2023. "Long-run macroeconomic consequences of Taiwan's aging labor force: an analysis of policy options," Journal of Policy Modeling, Elsevier, vol. 45(1), pages 121-138.

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