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Does age structure forecast economic growth?

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  • Bloom, David E.
  • Canning, David
  • Fink, Gunther
  • Finlay, Jocelyn E.

Abstract

Increases in the proportion of the working age population can yield a "demographic dividend" that enhances the rate of economic growth. We estimate the parameters of an economic growth model with a cross section of countries over the period 1960 to 1980 and investigate whether the inclusion of age structure improves the model's forecasts for the period 1980 to 2000. We find that including age structure improves the forecast, although there is evidence of parameter instability between periods with an unexplained growth slowdown in the second period. We use the model to generate growth forecasts for the period 2000 to 2020.
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Suggested Citation

  • Bloom, David E. & Canning, David & Fink, Gunther & Finlay, Jocelyn E., 2007. "Does age structure forecast economic growth?," International Journal of Forecasting, Elsevier, vol. 23(4), pages 569-585.
  • Handle: RePEc:eee:intfor:v:23:y:2007:i:4:p:569-585
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    Cited by:

    1. Werner Bönte & Oliver Falck & Stephan Heblich, 2007. "Demography and Innovative Entrepreneurship," Jena Economic Research Papers 2007-084, Friedrich-Schiller-University Jena.
    2. Hajamini, Mehdi, 2015. "The non-linear effect of population growth and linear effect of age structure on per capita income: A threshold dynamic panel structural model," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 43-58.
    3. Jeremy Grace & Charles Kenny & Christine Zhen-Wei Qiang & Jia Liu & Taylor Reynolds, 2003. "Information and Communication Technologies and Broad-Based Development : A Partial Review of the Evidence," World Bank Publications, The World Bank, number 15053.
    4. Aiyar, Shekhar & Mody, Ashoka, 2013. "The Demographic Dividend: Evidence from the Indian States," India Policy Forum, National Council of Applied Economic Research, vol. 9(1), pages 105-148.
    5. David E. Bloom & David Canning & Günther Fink & Tarun Khanna & Patrick Salyer, 2007. "Urban Settlement: Data, Measures, and Trends," PGDA Working Papers 2907, Program on the Global Demography of Aging.
    6. David E. BLOOM & Jocelyn E. FINLAY, 2009. "Demographic Change and Economic Growth in Asia," Asian Economic Policy Review, Japan Center for Economic Research, pages 45-64.
    7. Han, Xuehui & Wei, Shang-Jin, 2017. "Re-examining the middle-income trap hypothesis (MITH): What to reject and what to revive?," Journal of International Money and Finance, Elsevier, vol. 73(PA), pages 41-61.
    8. Kenny, Charles, 2002. "The Internet and Economic Growth in Least Developed Countries," WIDER Working Paper Series 075, World Institute for Development Economic Research (UNU-WIDER).
    9. Terrie Walmsley & Angel Aguiar & Syud Amer Ahmed, 2017. "Labour Migration and Economic Growth in East and South-East Asia," The World Economy, Wiley Blackwell, vol. 40(1), pages 116-139, January.
    10. Yunus Aksoy & Tobias Grasl & Ron P Smith, 2012. "The economic impact of demographic structure in OECD countries," Birkbeck Working Papers in Economics and Finance 1212, Birkbeck, Department of Economics, Mathematics & Statistics.
    11. Canning, David, 1998. "A database of world infrastructure stocks, 1950-95," Policy Research Working Paper Series 1929, The World Bank.
    12. Bloom, David E. & Canning, David & Hu, Linlin & Liu, Yuanli & Mahal, Ajay & Yip, Winnie, 2010. "The contribution of population health and demographic change to economic growth in China and India," Journal of Comparative Economics, Elsevier, pages 17-33.
    13. repec:cbh:journl:v:14:y:2015:i:2:p:89-127 is not listed on IDEAS
    14. Stefan Rayer & Stanley Smith, 2014. "Population Projections by Age for Florida and its Counties: Assessing Accuracy and the Impact of Adjustments," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), pages 747-770.
    15. David E. Bloom & David Canning & Linlin Hu & Yuanli Liu & Ajay Mahal & Winnie Yip, 2007. "The Contribution of Population Health and Demographic Change to Economic Growth in China and India," PGDA Working Papers 2807, Program on the Global Demography of Aging.
    16. World Bank, 2004. "Chile : New Economy Study, Volume 2. Background Documents," World Bank Other Operational Studies 14711, The World Bank.
    17. Martin Werding, 2008. "Ageing and Productivity Growth: Are there Macro-level Cohort Effects of Human Capital?," CESifo Working Paper Series 2207, CESifo Group Munich.
    18. Vistesen, Claus, 2009. "Ageing and Export Dependency," MPRA Paper 17655, University Library of Munich, Germany.
    19. Emese Kreiszné Hudák & Péter Varga & Viktor Várpalotai, 2015. "The macroeconomic impacts of demographic changes in Hungary in the context of the European Union," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 14(2), pages 89-127.
    20. Felipe, Jesus & Kumar, Utsav & Abdon, Arnelyn, 2012. "Using capabilities to project growth, 2010–2030," Journal of the Japanese and International Economies, Elsevier, pages 153-166.
    21. Jesus Crespo Cuaresma & Peter Huber & Doris A. Oberdabernig & Anna Raggl, 2015. "Migration in an ageing Europe: What are the challenges?," WWWforEurope Working Papers series 79, WWWforEurope.
    22. Hervé Boulhol & Laure Turner, 2009. "Employment-Productivity Trade-off and Labour Composition," OECD Economics Department Working Papers 698, OECD Publishing.
    23. David E. Bloom & David Canning & Günther Fink & Tarun Khanna & Patrick Salyer, 2007. "Urban Settlement: Data, Measures, and Trends," PGDA Working Papers 2907, Program on the Global Demography of Aging.
    24. Holger Strulik & Sebastian Vollmer, 2013. "Long-run trends of human aging and longevity," Journal of Population Economics, Springer;European Society for Population Economics, pages 1303-1323.
    25. Reynolds, Taylor & Kenny, Charles & Liu, Jia & Qiang, Christine Zhen-Wei, 2004. "Networking for foreign direct investment: the telecommunications industry and its effect on investment," Information Economics and Policy, Elsevier, vol. 16(2), pages 159-164, June.

    More about this item

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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