IDEAS home Printed from https://ideas.repec.org/a/sek/jijoes/v6y2017i2p82-99.html
   My bibliography  Save this article

Contribution of increased life expectancy to economic growth: evidence from CEE countries

Author

Listed:
  • Gindra Kasnauskiene

    (Vilnius University)

  • Karol Michnevic

    (Vilnius university)

Abstract

Population aging in a backdrop of growing life expectancy can be seen in many advanced economies, but the rapid pace of these demographic changes in Central and Eastern Europe (CEE) makes it a pressing issue for the region. We investigate these two phenomena and compare results with prior research to determine their separate and combined effect on output growth in a panel regression model using Eurostat data for the period of 1996 to 2013. Our findings point to increasing life expectancy having a negative effect on the economy and the share of the population in the 30-59 age range affecting it positively. The conclusions of our research demonstrate the utility of augmenting macroeconomic models with a demographics-sensitive component and the urgency of addressing the accelerating demographic decline in the region.

Suggested Citation

  • Gindra Kasnauskiene & Karol Michnevic, 2017. "Contribution of increased life expectancy to economic growth: evidence from CEE countries," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 6(2), pages 82-99, November.
    • Handle: RePEc:sek:jijoes:v:6:y:2017:i:2:p:82-99
    as

    Download full text from publisher

    File URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-1349
    Download Restriction: no
    File URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-1349?download=5
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Nir Jaimovich & Henry E. Siu, 2009. "The Young, the Old, and the Restless: Demographics and Business Cycle Volatility," American Economic Review, American Economic Association, vol. 99(3), pages 804-826, June.
    2. Jesus Fernández-Villaverde & Dirk Krueger, 2007. "Consumption over the Life Cycle: Facts from Consumer Expenditure Survey Data," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 552-565, August.
    3. Rojas, Juan A., 2005. "Life-cycle earnings, cohort size effects and social security: a quantitative exploration," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 465-485, February.
    4. Gonzalez-Eiras, Martín & Niepelt, Dirk, 2012. "Ageing, government budgets, retirement, and growth," European Economic Review, Elsevier, vol. 56(1), pages 97-115.
    5. Higgins, Matthew, 1998. "Demography, National Savings, and International Capital Flows," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 343-369, May.
    6. Attanasio, Orazio P, et al, 1999. "Humps and Bumps in Lifetime Consumption," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 22-35, January.
    7. Marattin, Luigi & Salotti, Simone, 2011. "Productivity and per capita GDP growth: The role of the forgotten factors," Economic Modelling, Elsevier, vol. 28(3), pages 1219-1225, May.
    8. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    9. Rod Tyers & Qun Shi, 2007. "Demographic Change and Policy Responses: Implications for the Global Economy," The World Economy, Wiley Blackwell, vol. 30(4), pages 537-566, April.
    10. Hans‐Peter Kohler & Francesco C. Billari & José Antonio Ortega, 2002. "The Emergence of Lowest‐Low Fertility in Europe During the 1990s," Population and Development Review, The Population Council, Inc., vol. 28(4), pages 641-680, December.
    11. Siliverstovs, Boriss & Kholodilin, Konstantin A. & Thiessen, Ulrich, 2011. "Does aging influence structural change? Evidence from panel data," Economic Systems, Elsevier, vol. 35(2), pages 244-260, June.
    12. Matteo Cervellati & Uwe Sunde, 2015. "The Economic and Demographic Transition, Mortality, and Comparative Development," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 189-225, July.
    13. Klaus Zimmermann, 2005. "European Labour Mobility: Challenges and Potentials," De Economist, Springer, vol. 153(4), pages 425-450, December.
    14. David E. Bloom & David Canning & Bryan Graham, 2003. "Longevity and Life‐cycle Savings," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 319-338, September.
    15. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
    16. Rafael Gómez & Pablo Hernández de Cos, 2008. "The importance of being mature: the effect of demographic maturation on global per capita GDP," Journal of Population Economics, Springer;European Society for Population Economics, vol. 21(3), pages 589-608, July.
    17. Kenc, Turalay & Sayan, Serdar, 2001. "Demographic shock transmission from large to small countries: An overlapping generations CGE analysis," Journal of Policy Modeling, Elsevier, vol. 23(6), pages 677-702, August.
    18. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
    19. Goyal, Amit, 2004. "Demographics, Stock Market Flows, and Stock Returns," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(1), pages 115-142, March.
    20. Dekle, Robert, 2000. "Demographic Destiny, Per-Capita Consumption, and the Japanese Saving-Investment Balance," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 16(2), pages 46-60, Summer.
    21. Heijdra, Ben J. & Romp, Ward E., 2009. "Retirement, pensions, and ageing," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 586-604, April.
    22. Echevarria, Cruz A. & Iza, Amaia, 2006. "Life expectancy, human capital, social security and growth," Journal of Public Economics, Elsevier, vol. 90(12), pages 2323-2349, December.
    23. Gollier, Christian & Zeckhauser, Richard J, 2002. "Horizon Length and Portfolio Risk," Journal of Risk and Uncertainty, Springer, vol. 24(3), pages 195-212, May.
    24. James Feyrer, 2007. "Demographics and Productivity," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 100-109, February.
    25. Robert Rowthorn, 2008. "The fiscal impact of immigration on the advanced economies," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(3), pages 561-581, Autumn.
    26. Victor R. Fuchs, 2018. "The New Demographic Transition: Most Gains in Life Expectancy Now Realized Late in Life," World Scientific Book Chapters, in: Health Economics and Policy Selected Writings by Victor Fuchs, chapter 32, pages 379-401, World Scientific Publishing Co. Pte. Ltd..
    27. Disney, Richard, 2007. "Population ageing and the size of the welfare state: Is there a puzzle to explain?," European Journal of Political Economy, Elsevier, vol. 23(2), pages 542-553, June.
    28. Choudhry, Misbah T. & Elhorst, J. Paul, 2010. "Demographic transition and economic growth in China, India and Pakistan," Economic Systems, Elsevier, vol. 34(3), pages 218-236, September.
    29. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
    30. Ha, Joonkyung & Lee, Sang-Hyop, 2016. "Demographic dividend and Asia’s economic convergence towards the US," The Journal of the Economics of Ageing, Elsevier, vol. 8(C), pages 28-41.
    31. Iris Claus & Les Oxley & Yang Du & Cuifen Yang, 2014. "Demographic Transition And Labour Market Changes: Implications For Economic Development In China," Journal of Economic Surveys, Wiley Blackwell, vol. 28(4), pages 617-635, September.
    32. J. Muysken & T. H. W. Ziesemer, 2013. "A permanent effect of temporary immigration on economic growth," Applied Economics, Taylor & Francis Journals, vol. 45(28), pages 4050-4059, October.
    33. James M. Poterba, 2001. "Demographic Structure And Asset Returns," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 565-584, November.
    34. Rafal Chomik & John Piggott, 2015. "Population Ageing and Social Security in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 10(2), pages 199-222, July.
    35. Hasan, Mohammad S., 2010. "The long-run relationship between population and per capita income growth in China," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 355-372, May.
    36. Rafael Gomez & Danielle Lamb, 2013. "Demographic Origins of the Great Recession: Implications for China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 21(2), pages 97-118, March.
    37. Razin, Assaf & Sadka, Efraim, 2007. "Aging population: The complex effect of fiscal leakages on the politico-economic equilibrium," European Journal of Political Economy, Elsevier, vol. 23(2), pages 564-575, June.
    38. repec:bla:revinw:v:44:y:1998:i:3:p:361-81 is not listed on IDEAS
    39. Frederic L. Pryor, 2003. "Demographic Effects on Personal Saving in the Future," Southern Economic Journal, John Wiley & Sons, vol. 69(3), pages 541-559, January.
    40. Fumio Ohtake & Makoto Saito, 1998. "Population Aging And Consumption Inequality In Japan," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(3), pages 361-381, September.
    41. David Blake & Les Mayhew, 2006. "On The Sustainability of the UK State Pension System in the Light of Population Ageing and Declining Fertility," Economic Journal, Royal Economic Society, vol. 116(512), pages 286-305, June.
    42. Mérette Marcel & Georges Patrick, 2010. "Demographic Changes and the Gains from Globalisation: An Analysis of Ageing, Capital Flows, and International Trade," Global Economy Journal, De Gruyter, vol. 10(3), pages 1-39, October.
    43. Diane Macunovich, 2012. "The role of demographics in precipitating economic downturns," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 783-807, July.
    44. AFM Hassan & Ruhul Salim & Harry Bloch, 2011. "Population Age Structure, Saving, Capital Flows And The Real Exchange Rate: A Survey Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 25(4), pages 708-736, September.
    45. Guest, Ross S. & McDonald, Ian M., 2007. "Global GDP shares in the 21st century -- An equilibrium approach," Economic Modelling, Elsevier, vol. 24(6), pages 859-877, November.
    46. Fumio OHTAKE, 2008. "Inequality in Japan," Asian Economic Policy Review, Japan Center for Economic Research, vol. 3(1), pages 87-109, June.
    47. Tabata, Ken, 2005. "Population aging, the costs of health care for the elderly and growth," Journal of Macroeconomics, Elsevier, vol. 27(3), pages 472-493, September.
    48. Cruz A. Echevarría, 2004. "Life Expectancy, Schooling Time, Retirement, and Growth," Economic Inquiry, Western Economic Association International, vol. 42(4), pages 602-617, October.
    49. George Hondroyiannis & Evangelia Papapetrou, 2000. "Do Demographic Changes Affect Fiscal Developments?," Public Finance Review, , vol. 28(5), pages 468-488, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agnieszka Stanimir, 2020. "Generation Y on labour market ? perception of work values and quality of job," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 9(1), pages 202-223, June.
    2. Cörvers, Frank & Reinold, Julia & Chakkar, Saena & Bolzonella, Francesco & Ronda, Vera, 2021. "Literature review labour migration," ROA Technical Report 005, Maastricht University, Research Centre for Education and the Labour Market (ROA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Katerina Koka, 2015. "The Impact of the Population Age Structure on the Response to Negative Asset Shocks," Economics Bulletin, AccessEcon, vol. 35(4), pages 2270-2281.
    2. Roel van Elk & Marc van der Steeg & Dinand Webbink, 2013. "The effects of a special program for multi-problem school dropouts on educational enrolment, employment and criminal behaviour; Evidence from a field experiment," CPB Discussion Paper 241.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Zhang, Haifeng & Zhang, Hongliang & Zhang, Junsen, 2015. "Demographic age structure and economic development: Evidence from Chinese provinces," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 170-185.
    4. Hans Fehr & Sabine Jokisch, 2006. "Demographischer Wandel und internationale Finanzmärkte," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(4), pages 501-517, November.
    5. Hettihewa, Samanthala & Saha, Shrabani & Zhang, Hanxiong, 2018. "Does an aging population influence stock markets? Evidence from New Zealand," Economic Modelling, Elsevier, vol. 75(C), pages 142-158.
    6. Börsch-Supan, Axel & Ludwig, Alexander & Sommer, Mathias, 2005. "Aging and asset prices," Papers 07-29, Sonderforschungsbreich 504.
    7. El Mekkaoui de Freitas, Najat & Oliveira Martins, Joaquim, 2014. "Health, pension benefits and longevity: How they affect household savings?," The Journal of the Economics of Ageing, Elsevier, vol. 3(C), pages 21-28.
    8. Adrien Auclert & Hannes Malmberg & Frederic Martenet & Matthew Rognlie, 2021. "Demographics, Wealth, and Global Imbalances in the Twenty-First Century," NBER Working Papers 29161, National Bureau of Economic Research, Inc.
    9. Zongwu Cai & Jiazi Chen & Linlin Niu, 2021. "A Semiparametric Model for Bond Pricing with Life Cycle Fundamental," Working Papers 2021-01-06, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    10. Mann, Katja & Davenport, Margaret, 2016. "Demography, Capital Flows and Asset Allocation over the Life-cycle," VfS Annual Conference 2016 (Augsburg): Demographic Change 145948, Verein für Socialpolitik / German Economic Association.
    11. Thomas Ziesemer & Anne von Gässler, 2021. "Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(2), pages 129-160, May.
    12. Zongwu Cai & Jiazi Chen & Linlin Liu, 2021. "Estimating Impact of Age Distribution on Bond Pricing: A Semiparametric Functional Data Analysis Approach," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202102, University of Kansas, Department of Economics, revised Jan 2021.
    13. Casper van Ewijk & Erik Canton & Paul Tang, 2004. "Ageing and international capital flows," CPB Document 43.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Bloom, David E. & Kuhn, Michael & Prettner, Klaus, 2018. "Health and Economic Growth," IZA Discussion Papers 11939, Institute of Labor Economics (IZA).
    15. Barry P. Bosworth & Ralph C. Bryant & Gary Burtless, 2004. "The Impact of Aging on Financial Markets and the Economy: A Survey," Working Papers, Center for Retirement Research at Boston College 2004-23, Center for Retirement Research.
    16. Marchiori, Luca, 2011. "Demographic trends and international capital flows in an integrated world," Economic Modelling, Elsevier, vol. 28(5), pages 2100-2120, September.
    17. Casper van Ewijk & Erik Canton & Paul Tang, 2004. "Ageing and international capital flows," CPB Document 43, CPB Netherlands Bureau for Economic Policy Analysis.
    18. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    19. Kedar-Levy, Haim, 2014. "The potential effect of US baby-boom retirees on stock returns," The North American Journal of Economics and Finance, Elsevier, vol. 30(C), pages 106-121.
    20. Schröder, Carsten & Rehdanz, Katrin & Narita, Daiju & Okubo, Toshihiro, 2013. "Household formation and residential energy demand: Evidence from Japan," Kiel Working Papers 1836, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    Keywords

    demographics; life expectancy; population aging; economic growth; CEE countries;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:jijoes:v:6:y:2017:i:2:p:82-99. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klara Cermakova (email available below). General contact details of provider: https://ijoes.iises.net/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.