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Long-run macroeconomic consequences of Taiwan's aging labor force: an analysis of policy options

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  • Goh, Soo Khoon
  • Wong, Koi Nyen
  • McNown, Robert
  • Chen, Li-Ju

Abstract

Taiwan is poised to become a super-aged society. We found there exist long-run relationships involving key macroeconomic variables and population age shares. The findings indicate that Taiwan's aggregate production exhibits increasing returns to scale where the quality of labor input is the single most important source of growth. The out-of-sample forecast plots envisage that Taiwan's aging labor force does not necessarily decelerate real GDP growth for at least a decade or more. In particular, there are viable policy measures to curb labor shortages due to the shift in the age structure of the labor force caused by population aging.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:1:p:121-138
    DOI: 10.1016/j.jpolmod.2023.01.006
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    More about this item

    Keywords

    Taiwan; Aging; Conditional ARDL; Quality of labor;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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