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Population Aging and Economic Growth in Asia

In: The Economic Consequences of Demographic Change in East Asia, NBER-EASE Volume 19

  • David E. Bloom
  • David Canning
  • Jocelyn E. Finlay

The decline in the total fertility rate between 1960 and 2005, coupled with an increase in life expectancy and the dynamic evolution of past variation in birth and death rates, is producing a significant shift in age structure in Asia. The age distribution has shifted from one with a high youth-age population share to one with a high old-age population share. We illustrate the role of these separate forces in shaping the age distribution. We also argue that the economic consequences of population aging depend on behavioral responses to the shift in age structure: the female labor force participation response to the decline in fertility, child quality/quantity trade-off in the face of the fertility decline, savings adjustments to an increase in life expectancy, and social security distortions insofar as the pace of life expectancy improvements is faster than the pace of policy adjustments. We estimate the association between old- and youth-age population shares and economic growth. The results suggest that population aging may not significantly impede economic performance in Asia in the long run.

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This chapter was published in:
  • Takatoshi Ito & Andrew Rose, 2010. "The Economic Consequences of Demographic Change in East Asia, NBER-EASE Volume 19," NBER Books, National Bureau of Economic Research, Inc, number ito_08-2, October.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 8148.
    Handle: RePEc:nbr:nberch:8148
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    1. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
    2. Robert M. Schmidt & Allen C. Kelley, 1996. "Saving, dependency and development," Journal of Population Economics, Springer, vol. 9(4), pages 365-386.
    3. David E. Bloom & David Canning & Rick Mansfield & Michael Moore, 2006. "Demographic Change, Social Security Systems, and Savings," NBER Working Papers 12621, National Bureau of Economic Research, Inc.
    4. Bloom, David E & Williamson, Jeffrey G, 1998. "Demographic Transitions and Economic Miracles in Emerging Asia," World Bank Economic Review, World Bank Group, vol. 12(3), pages 419-55, September.
    5. David E. Bloom & David Canning & Michael Moore, 2004. "The Effect of Improvements in Health and Longevity on Optimal Retirement and Saving," NBER Working Papers 10919, National Bureau of Economic Research, Inc.
    6. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," CID Working Papers 42, Center for International Development at Harvard University.
    7. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "Economic Growth and the Demographic Transition," NBER Working Papers 8685, National Bureau of Economic Research, Inc.
    8. David Cutler & Angus Deaton & Adriana Lleras-Muney, 2005. "The Determinants of Mortality," Working Papers 164, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    9. Young, Alwyn, 1994. "Lessons from the East Asian NICS: A contrarian view," European Economic Review, Elsevier, vol. 38(3-4), pages 964-973, April.
    10. David E. Bloom & David Canning & Jocelyn E. Finlay, 2010. "Population Aging and Economic Growth in Asia," NBER Chapters, in: The Economic Consequences of Demographic Change in East Asia, NBER-EASE Volume 19, pages 61-89 National Bureau of Economic Research, Inc.
    11. David G. Blanchflower & Richard B. Freeman, 2000. "Youth Employment and Joblessness in Advanced Countries," NBER Books, National Bureau of Economic Research, Inc, number blan00-1, October.
    12. David Bloom & David Canning & Günther Fink & Jocelyn Finlay, 2009. "Fertility, female labor force participation, and the demographic dividend," Journal of Economic Growth, Springer, vol. 14(2), pages 79-101, June.
    13. World Demographic and Ageing Forum & Asghar Zaidi & Alexandre Sidorenko, 2008. "Features and Challenges of Population Ageing using the European Perspective," Journal Article y:2008:i:1, World Demographic and Ageing Forum.
    14. Pritchett, Lant H. & DEC, 1994. "Desired fertility and the impact of population policies," Policy Research Working Paper Series 1273, The World Bank.
    15. Sanders Korenman & David Neumark, 1997. "Cohort Crowding and Youth Labor Markets: A Cross-National Analysis," NBER Working Papers 6031, National Bureau of Economic Research, Inc.
    16. Costa, Dora L, 1995. "Pensions and Retirement: Evidence from Union Army Veterans," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 297-319, May.
    17. Ronald D Lee & Andrew Mason & Tim Miller, 1998. "Saving, Wealth, and Population," Working Papers 199805, University of Hawaii at Manoa, Department of Economics.
    18. 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 343-69, May.
    19. David E. Bloom & David Canning & Günther Fink & Jocelyn Finlay, 2007. "Realizing the Demographic Dividend: Is Africa any different?," PGDA Working Papers 2307, Program on the Global Demography of Aging.
    20. Gernot Doppelhofer & Ronald I. Miller & Xavier Sala-i-Martin, 2000. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," NBER Working Papers 7750, National Bureau of Economic Research, Inc.
    21. Kelley, Allen C. & Schmidt, Robert M., 1995. "Aggregate Population and Economic Growth Correlations: The Role of the Components of Demographic Change," Working Papers 95-37, Duke University, Department of Economics.
    22. David E. Bloom & David Canning & Michael Moore, 2007. "A Theory of Retirement," PGDA Working Papers 2607, Program on the Global Demography of Aging.
    23. Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 641-80, August.
    24. David E. Bloom & David Canning & Günther Fink & Jocelyn E. Finlay, 2009. "The Cost of Low Fertility in Europe," NBER Working Papers 14820, National Bureau of Economic Research, Inc.
    25. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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    27. James M. Poterba, 2004. "The impact of population aging on financial markets," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 163-216.
    28. Kelley, Allen C & Schmidt, Robert M, 1996. "Saving, Dependency and Development," Journal of Population Economics, Springer, vol. 9(4), pages 365-86, November.
    29. David E. Bloom & Jeffrey D. Sachs, 1998. "Geography, Demography, and Economic Growth in Africa," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 207-296.
    30. Leff, Nathaniel H, 1969. "Dependency Rates and Savings Rates," American Economic Review, American Economic Association, vol. 59(5), pages 886-96, December.
    31. David E. Bloom & David Canning, 2005. "Global Demographic Change: Dimensions and Economic Significance," PGDA Working Papers 0105, Program on the Global Demography of Aging.
    32. David E. Bloom & David Canning & Günther Fink, 2008. "Population Aging and Economic Growth," PGDA Working Papers 3108, Program on the Global Demography of Aging.
    33. Nikhil Roy & Andrew D. Foster, 1996. "The Dynamics of Education and Fertility: Evidence from a Family Planning Experiment"," Home Pages _073, University of Pennsylvania.
    34. Kalemli-Ozcan, Sebnem & Ryder, Harl E. & Weil, David N., 2000. "Mortality decline, human capital investment, and economic growth," Journal of Development Economics, Elsevier, vol. 62(1), pages 1-23, June.
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