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Nonlinear Effects of Population Aging on Economic Growth?

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  • Lee, Hyun-Hoon
  • Shin, Kwanho

Abstract

Using panel data for 142 countries for the period from 1960 to 2014, we assess the effects of population aging on economic growth. We find that population aging proxied by old-age population share (or old-age dependency ratio) negatively affects economic growth only when it reaches a certain high level and its negative effects grow stronger as population aging deepens. We also find that population aging has hampered economic growth during more recent years, especially in more aged countries which are mostly developed countries. This nonlinear effect of aging is mainly driven by the fact that we use old-age population share as a proxy for aging. If we use lower working-age population share as a proxy for aging, the nonlinear relationship disappears: working-age population share is positively related to economic growth in a linear way.

Suggested Citation

  • Lee, Hyun-Hoon & Shin, Kwanho, 2019. "Nonlinear Effects of Population Aging on Economic Growth?," Discussion paper series HIAS-E-86, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
  • Handle: RePEc:hit:hiasdp:hias-e-86
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    Cited by:

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    3. Park, Cyn-Young & Shin, Kwanho & Kikkawa, Aiko, 2022. "Demographic change, technological advance, and growth: A cross-country analysis," Economic Modelling, Elsevier, vol. 108(C).
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    5. Fukuda, Yukari, 2020. "Land prices and agglomeration: Theory and evidence from the Tokyo metropolitan area," Journal of the Japanese and International Economies, Elsevier, vol. 58(C).
    6. Fukuda, Shin-ichi & Okumura, Koki, 2020. "Regional convergence under declining population: The case of Japan," Japan and the World Economy, Elsevier, vol. 55(C).
    7. Katarzyna Maj-Waśniowska & Tomasz Jedynak, 2020. "The Issues and Challenges of Local Government Units in the Era of Population Ageing," Administrative Sciences, MDPI, vol. 10(2), pages 1-23, June.
    8. Futagami, Koichi & Sunaga, Miho, 2022. "Risk aversion and longevity in an overlapping generations model," Journal of Macroeconomics, Elsevier, vol. 72(C).
    9. Khan, Irfan & Hou, Fujun & Irfan, Muhammad & Zakari, Abdulrasheed & Le, Hoang Phong, 2021. "Does energy trilemma a driver of economic growth? The roles of energy use, population growth, and financial development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    population aging; working-age population; economic growth; nonlinearity; developed countries;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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