Nonlinear Effects of Population Aging on Economic Growth€¦ · Nonlinear Effects of Population...
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Nonlinear Effects of Population Aging on Economic Growth Hyun-Hoon Lee (Kangwon National University, Korea) Kwanho Shin (Korea University, Korea) 1
Transcript of Nonlinear Effects of Population Aging on Economic Growth€¦ · Nonlinear Effects of Population...
Nonlinear Effects of Population Aging on Economic
Growth
Hyun-Hoon Lee (Kangwon National University, Korea)
Kwanho Shin(Korea University, Korea)
1
Motivation
• As compared to medium-age workers (more generally working-age population), the elderly participate less actively in labor force, their productivities are lower (Shirbekk, 2014; Liu and Westelius, 2016), and save less (Park and Shin, 2012; Horioka and Niimi, 2017).
• Thus, if the equal number of working-age population is replaced with old-age population while other things being equal, population aging in a country would hamper its economic growth, posing demographic burden.
2
Motivation
• However, previous empirical studies examining
the overall impact of population aging on
economic growth have often yielded mixed
results.
3
Motivation• For example, using a panel dataset for the period 1960 –
2005, Bloom, Canning and Finlay (2008) find that the
effect of old age on growth is negative in the short run,
but insignificant in the long run. They argue that negative
burden of aging can be mitigated by behavioral
responses such as higher savings for retirement, higher
investment in education, and greater labor force
participation. This line of argument can be found in
Bloom, Canning, and Finlay (2008), Bloom, Canning,
and Fink (2008), and Bloom, Canning and Fink (2011).
• More recently, Acemoglu and Restrepo (2017) argue that
countries experiencing more rapid aging have grown
more rapidly because they adopt automation
technologies more rapidly. 4
Motivation
• In contrast, using a sample of 142 countries for
the period 1960-2014, Lee, Shin, and Park
(2017) find that population aging has a negative
impact on economic growth in both short run
and long run.
• Maestas et al (2016) find that using the U.S.
states data for the period 1980-2010, population
aging decreases the growth rate of GDP per
capita.
5
Motivation
• Most, if not all, previous studies presume that
the effect of population aging on economic
growth is linear, irrespective of the level of
population aging.
• However, population aging may impact
economic growth negatively only when its level
reaches a certain high level and its impact gets
stronger as population aging deepens.
6
Motivation• One of the major reasons might be due to the
changing structure of population.
• That is, as old-age population share increases, the
sum of youth-age and working-age population
shares should decrease:
• ∆𝑂
𝑃= −(∆
𝑌
𝑃+ ∆
𝑊
𝑃)
• Thus, increasing old-age population share may
coincide with increasing working-age population
share if the speed of decreasing youth-age
population share is faster than that of increasing old-
age population share. 7
Figure 1: Trend of population shares in Japan and South Korea
In early stages of demographic shift in most countries, as population aging rate (in terms of old-age population share or old-age dependency rate) increases, working-age population share also increases.
8
Objective• As long as demographic dividend due to the increasing
share of working-age population is greater than
demographic burden due to the increasing share of old-
age population, the “overall” effect of population aging on
economic growth may not necessary be significantly
negative.
• In this study, therefore, we systematically show that the
negative effects of population aging on economic growth
become visible only when population aging reaches a
certain high level and its effects become more strongly
visible as population aging deepens.
9
Stylized facts of demographic changes
10
Figure 2: Relationship among age variables
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COGCOGCOGCOGCOGCOGCOGCOGCOGCOGCOGZARZARZARZARZARZARZARZARZARZARZAR
BENBEN
BENBENBENBENBENBENBEN
BENBEN
GNQGNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQGNQ
GNQGNQ
ETHETHETHETH
ETHETHETHETHETHETH
ETH
GABGAB
GAB
GABGABGABGABGAB
GABGAB
GABGMBGMB
GMB
GMB
GMBGMBGMBGMBGMBGMBGMB
GHAGHAGHAGHAGHAGHAGHAGHAGHAGHAGHA
GNBGNBGNBGNBGNBGNBGNBGNB
GNBGNBGNBGINGINGINGINGINGINGINGINGINGIN
GINCIVCIVCIVCIVCIVCIVCIVCIVCIVCIVCIV
KENKENKENKENKENKEN
KEN
KEN
KENKENKEN
LSOLSOLSOLSOLSOLSOLSOLSOLSO
LSO
LSO
LBRLBRLBRLBRLBRLBRLBRLBRLBRLBRLBRMDGMDGMDGMDGMDG
MDGMDGMDGMDGMDGMDGMWIMWI
MWIMWIMWIMWIMWI
MWIMWIMWIMWI
MLIMLIMLI
MLIMLIMLIMLIMLIMLIMLIMLI
MRTMRTMRTMRTMRTMRTMRT
MRTMRTMRTMRT
MUSMUS
MUS
MUS
MUS
MUS
MUSMUS
MUSMUS
MUS
MAR
MARMAR
MAR
MARMAR
MAR
MAR
MAR
MARMAR
MOZMOZMOZMOZMOZMOZMOZMOZMOZMOZMOZNERNERNERNERNERNERNERNER
NERNERNER
NGANGANGANGANGANGANGANGANGANGANGA
ZWEZWEZWEZWEZWE
ZWEZWEZWEZWEZWEZWE
RWARWARWARWA
RWARWA
RWA
RWARWA
RWARWA
STPSTPSTPSTPSTP
STPSTP
STPSTP SYC
SYCSYC
SYC
SYCSYCSYC
SYC
SYC
SYCSYC
SENSENSENSENSENSENSEN
SENSENSENSEN
SLESLESLESLESLESLESLESLESLESLESLENAMNAM
NAMNAMNAMNAM
NAMNAMNAMNAMNAM
SDNSDNSDNSDNSDNSDNSDNSDNSDN
SWZSWZSWZSWZSWZSWZ
SWZ
SWZ
SWZ
TZATZATZATZATZATZATZATZATZATZATZA
TGOTGOTGOTGOTGOTGOTGOTGOTGOTGOTGO
TUNTUNTUNTUN
TUNTUN
TUN
TUN
TUN
TUNTUN
UGAUGAUGAUGAUGAUGAUGAUGAUGAUGAUGA
BFABFABFABFABFABFABFABFABFABFABFAZMB
ZMBZMBZMBZMBZMBZMBZMBZMBZMBZMB
FJI
FJI
FJI
FJIFJIFJIFJIFJI
FJI
FJIFJI
ARM ARM
ARM
ARM
ARM
AZEAZE
AZE
AZE
AZE
BLR BLR
BLRBLRBLR
ALB
ALB
ALBALBALBALB
ALB
ALB
ALB
GEO GEOGEO
GEOGEO
KAZKAZ
KAZ
KAZKAZ
KGZKGZ
KGZ
KGZKGZ
BGRBGRBGRBGR BGR BGR
BGRBGRBGR
MDAMDA
MDA
MDAMDA
RUSRUS
RUSRUSRUS
TJKTJK
TJK
TJK
TJK
CHNCHNCHNCHN
CHN
CHNCHN
CHN
CHN
CHNCHN
TKMTKM
TKM
TKM
TKM UKRUKR
UKRUKRUKR
UZBUZB
UZB
UZB
UZB CZE
CZECZECZE
CZE
SVK
SVK
SVK
SVKSVK
EST ESTEST EST
ESTLVA LVALVA LVA
LVASRB SRB SRBSRBSRB
MNE MNE MNEMNEMNEHUNHUN
HUNHUNHUN
HUNHUNHUNHUN
LTU LTU LTU LTU LTU
MNGMNG
MNGMNG
MNG
MNG
MNG
MNGMNG HRVHRV HRVHRVHRV
SVNSVN SVN SVN
SVN
MKDMKD
MKDMKD
MKDBIH BIH BIH
BIHBIH
POLPOLPOLPOLPOL
POL
POL
POLPOL
ROMROMROM
ROMROM
ROMROMROM ROMROM
ROM
50
60
70
80
90
work
_sh
0 5 10 15 20 25old_sh
(A) Youth-age share vs. working-age share (B) Old-age share vs. working-age share
Stylized facts of demographic changes
11
Figure 3: Relationship between population aging and working –age share in the case of Japan and South Korea
(A) Old-age share vs. working age share (B) Old-age dependency ratio vs. working-age share
JPN
JPNJPN
JPN JPN
JPN
JPNJPN
JPN
JPN
JPN
KOR
KOR
KOR
KOR
KOR
KOR
KOR
KORKOR
KORKOR
55
60
65
70
75
work
_sh
5 10 15 20 25old_sh
JPN
JPNJPN
JPNJPN
JPN
JPNJPN
JPN
JPN
JPN
KOR
KOR
KOR
KOR
KOR
KOR
KOR
KORKOR
KORKOR
55
60
65
70
75
work
_sh
0 10 20 30 40(mean) old_dep
Stylized facts of demographic changes
12
Figure 4: Relationship among changes in age variables
(A) Change in youth-age share vs. change in working-age share
(B) Change in old-age share vs. change in working-age share
USA
USAUSA
USA
USAUSA
USA
USAUSA
USA
GBRGBR
GBR
GBR
GBR
GBRGBR
GBRGBR
GBR
AUT
AUT
AUT
AUT
AUT
AUTAUT
AUT
AUTAUT BEL
BEL
BEL
BEL
BEL
BELBELBELBEL
BELDNK
DNKDNK
DNKDNK
DNK
DNKDNKDNK
DNK
FRAFRA
FRA
FRA
FRA
FRAFRAFRAFRA
FRA
DEU
DEU
DEU
DEU
DEU
DEUDEU
DEU
DEU
DEUITAITA
ITA
ITAITA
ITA
ITAITAITAITA
LUX
LUX
LUXLUX
LUX
LUXLUX
LUX
LUX
LUXNLD
NLD
NLD
NLD
NLD
NLD
NLDNLDNLD
NLD
NORNOR
NOR
NORNOR
NOR NORNOR
NOR
NORSWE
SWESWE
SWESWE
SWESWE
SWESWE
SWE
CHECHE
CHE
CHECHE
CHECHE
CHECHE
CHE
CAN
CANCAN
CAN
CAN
CANCAN
CANCAN
CAN
JPN
JPN
JPN
JPN
JPNJPN
JPN
JPNJPN
JPN
FIN
FINFIN
FINFIN
FINFIN
FINFIN
FIN
GRC
GRC
GRCGRC
GRCGRC
GRC
GRCGRC
GRC
ISL
ISLISLISL
ISLISLISL
ISLISL
ISL IRLIRLIRLIRL
IRL
IRL
IRL
IRL
IRL
IRL
MLT
MLT
MLT
MLT
MLTMLT
MLTMLTMLT
MLT PRT
PRTPRT
PRTPRTPRT
PRT
PRT
PRTPRT ESP
ESP
ESP
ESP
ESPESP
ESP
ESPESP
ESP
TUR
TURTURTUR
TURTURTUR
TURTURTUR AUSAUS
AUSAUSAUS
AUSAUS
AUSAUS
AUS
NZLNZL
NZLNZL
NZL
NZLNZL
NZLNZL
NZL ZAF
ZAFZAFZAF
ZAF
ZAFZAF
ZAF
ZAFZAF
ARGARG
ARGARG
ARG
ARG
ARGARGARGARG
BOLBOL
BOLBOLBOL
BOLBOLBOLBOLBOL
BRA
BRABRA
BRABRA
BRABRA
BRABRABRA
CHL
CHL
CHLCHL
CHL
CHLCHL
CHLCHL
CHL
COL
COL
COLCOLCOL
COL
COLCOL
COLCOL
CRI
CRI
CRI
CRI
CRICRI
CRI
CRICRI
CRI
DOM
DOM
DOMDOMDOM
DOMDOMDOMDOMDOM
ECU
ECUECU
ECUECUECUECUECUECUECU
SLV
SLVSLVSLV
SLVSLV
SLVSLV
SLV
SLV
GTMGTM
GTMGTM
GTM
GTMGTM
GTMGTM
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HTI
HTIHTI
HTI
HTI
HTI
HTI
HTIHTIHTI
HNDHND
HNDHNDHNDHND
HND
HND
HND
HND
MEX
MEXMEX
MEX
MEXMEX
MEXMEXMEXMEX
NIC
NIC
NIC
NICNIC
NIC
NICNICNIC
NIC
PAN
PAN
PAN
PANPANPANPAN
PANPANPANPRY
PRYPRY
PRY
PRYPRY
PRY
PRYPRYPRY
PER
PERPER
PERPERPERPERPER
PERPER
URYURYURYURYURY
URYURYURYURYURY
VEN
VEN
VENVEN
VENVEN
VENVENVENVEN
ATG
ATG
ATG
ATG
ATGATGATG
ATGBHS
BHS
BHSBHS
BHS
BHSBHS
BHS
ABWABW
ABW
ABWABW
ABWABW
ABW BRB
BRBBRB
BRB
BRB
BRB
BRBBRBBRB
BRB
GRD
GRD
GRD
GRD
GRD
GRDGRD
GRD
BLZ
BLZBLZ
BLZBLZ
BLZBLZ
BLZ
JAM
JAM
JAMJAM
JAM
JAMJAMJAM
JAM
JAM
CUW
LCALCALCA
LCA LCA
LCALCA
LCA
VCT
VCTVCT
VCT
VCTVCTVCT
VCT
SUR
SUR
SUR
SUR
SUR
SURSUR
SUR
TTO
TTO
TTO
TTO
TTO
TTO
TTO
TTO
TTO
TTO
BHR
BHR
BHR
BHRBHRBHR
BHR
BHR
CYPCYP
CYP
CYP
CYPCYP
CYP
CYPCYP
CYP
IRN
IRNIRN
IRN
IRN
IRN
IRN
IRN
IRN
IRN
IRQ
IRQ
IRQIRQ
IRQIRQ
IRQIRQISR
ISR
ISR
ISR
ISR
ISRISR
ISRISR
ISRJOR
JOR
JOR
JOR
JOR
JORJOR
JORJOR
JOR
KWT
KWT
KWT
KWTKWT
KWTKWTKWT
LBNLBN
LBNLBNLBN
LBN
LBNLBN
OMNOMN
OMN
OMN
OMN
OMN
OMN
OMN
QAT
QATQAT
QAT
QAT
QAT
QAT
QAT
SAUSAU
SAU
SAU
SAU
SAUSAU
SAU
SYR
SYR
SYRSYR
SYR
SYR
SYRSYRSYR
SYR
ARE
AREARE
AREARE
ARE
ARE
ARE
EGYEGYEGY
EGYEGY
EGY
EGY
EGY
EGY
EGYYEM
YEM
YEM
YEMYEM
BGDBGD
BGD
BGDBGD
BGDBGDBGDBGDBGD
BTN
BTNBTNBTN
BTN
BTN
BTN
BTN
BRN
BRNBRNBRN
BRN
BRNBRN
BRN
MMR
MMRMMRMMR
MMR
MMRMMR
MMR
MMRMMR
KHM
KHM
KHMKHM
KHM
KHM
KHM
KHM
LKALKA
LKA
LKALKALKA
LKALKA
LKA
LKA
HKG
HKG
HKG
HKG
HKGHKGHKG
HKG
HKG
HKGIND
INDINDINDINDIND
INDINDINDIND
IDN
IDN
IDN
IDNIDN
IDNIDN
IDN
IDNIDN
KOR
KOR
KORKORKORKOR
KOR
KORKORKOR
LAOLAO
LAOLAOLAO
LAO
LAOLAO
MAC
MAC
MACMAC
MAC
MAC
MAC
MAC
MYS
MYS
MYSMYS
MYS
MYSMYS
MYSMYSMYS
MDV
MDV
MDV
MDV
MDV
MDVMDV
MDV
NPL
NPL
NPLNPLNPL
NPL
NPLNPL
NPL
NPL
PAKPAK
PAKPAK
PAKPAK
PAK
PAKPAK
PAK
PHL
PHLPHLPHLPHLPHLPHLPHL
PHLPHL
SGP
SGPSGP
SGP
SGP
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SGP
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THA
THA
THA
THA
THA
THA
THATHA
THATHAVNMVNMVNMVNM
VNM
VNMVNM
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DJI
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BWA
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BWA
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BDI
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BDIBDI
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CMRCMRCMR
CMRCMRCMR
CMRCMRCMRCMR
CPV
CPVCPV
CPV
CPV
CPV
CPV
CPV
CPV
CPV
CAFCAFCAFCAFCAFCAF
CAFCAFCAF
CAF
TCDTCD
TCDTCDTCDTCDTCDTCD
TCDTCD
COM
COMCOMCOMCOM
COM
COMCOM
COMCOM
COGCOGCOGCOG
COGCOGCOG
COGCOGCOGZAR
ZARZARZARZARZARZARZARZARZAR
BENBEN
BENBEN
BENBEN
BENBENBENBEN
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
ETH
ETHETHETH
ETHETHETH
ETHETH
ETH
GAB
GABGAB
GAB
GABGAB
GAB
GABGAB
GAB
GMB
GMBGMBGMB
GMBGMBGMB
GMB
GMBGMBGHA
GHA
GHA
GHAGHAGHAGHAGHA
GHAGHA
GNBGNB
GNBGNBGNB
GNB
GNB
GNBGNBGNB
GIN
GIN
GIN
GINGINGIN
GINGIN
GINGIN
CIVCIVCIV
CIVCIV
CIVCIV
CIVCIV
CIV
KEN
KENKENKEN
KEN
KEN
KENKEN
KEN
KEN
LSOLSOLSOLSOLSO
LSOLSOLSO
LSOLSO
LBRLBRLBRLBRLBR
LBRLBRLBR
LBRLBR
MDG
MDGMDG
MDGMDG
MDGMDGMDG
MDGMDG
MWI
MWIMWIMWI
MWIMWI
MWIMWI
MWIMWI
MLIMLIMLIMLIMLI
MLI
MLIMLIMLI
MLI
MRT
MRTMRTMRTMRTMRT
MRTMRTMRTMRTMUS
MUSMUS
MUSMUS
MUS
MUSMUSMUSMUS
MAR
MAR
MARMAR
MARMAR
MAR
MARMAR
MAR
MOZMOZMOZMOZ
MOZ
MOZ
MOZ
MOZMOZ
MOZNER
NERNERNERNERNERNER
NERNERNER
NGANGANGANGANGA
NGANGA
NGANGANGA
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RWA
RWA
RWA
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RWA
RWA
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STP
STP
STPSTPSTP
SYC
SYC
SYCSYC
SYCSYC
SYCSYCSYC
SYC
SEN
SEN
SENSEN
SEN
SENSENSENSEN
SENSLE
SLESLESLESLE
SLE
SLESLESLESLE
NAMNAM
NAMNAM
NAM
NAM
NAMNAMNAM
NAM
SDNSDNSDNSDN
SDNSDN
SDNSDN
SWZSWZ
SWZSWZ
SWZ
SWZSWZSWZ
TZATZATZATZATZATZATZATZA
TZATZATGOTGOTGO
TGOTGO
TGOTGO
TGOTGO
TGO
TUN
TUNTUNTUNTUNTUN
TUNTUN
TUN
TUN
UGAUGAUGAUGAUGAUGAUGA
UGAUGA
UGA
BFABFABFABFABFA
BFA
BFABFABFABFA
ZMBZMBZMB
ZMBZMBZMB
ZMBZMB
ZMBZMB
FJI
FJI
FJI
FJIFJI
FJI
FJI
FJIFJI
FJI
ARM
ARM ARM ARM
AZE
AZE
AZE
AZE
BLR
BLRBLR
BLR
ALBALB
ALB
ALBALB
ALB
ALBALB
GEO
GEO
GEO
GEOKAZ
KAZKAZ
KAZ
KGZ
KGZKGZ
KGZ
BGR
BGRBGR
BGR
BGRBGR
BGR
BGR
MDA
MDAMDA
MDARUS
RUS
RUS
RUSTJK
TJK
TJK
TJK
CHN
CHN
CHN
CHN
CHN
CHNCHN
CHN
CHN
CHN
TKM
TKMTKM
TKM
UKR
UKR
UKR UKR
UZB
UZBUZB
UZBCZECZE
CZE
CZE
SVKSVK
SVK
SVKEST
EST
EST
EST
LVA
LVA
LVA
LVA
SRBSRB
SRB
SRBMNEMNE MNEMNE
HUN
HUN
HUN
HUN
HUN
HUNHUN
HUNLTU
LTULTU
LTU MNG
MNGMNG
MNG
MNG
MNGMNG
MNG
HRVHRV
HRVHRV
SVNSVN
SVN
SVN
MKDMKDMKDMKD
BIHBIH
BIH
BIH
POL
POLPOL
POL
POL
POL
POL
POL
ROM
ROM
ROM
ROM
ROM
ROM
ROMROMROM
ROM
-50
51
0
work
_sh_
c
-10 -5 0 5young_sh_c
USA
USA USA
USA
USAUSA
USA
USAUSA
USA
GBR GBR
GBR
GBR
GBR
GBRGBR
GBRGBR
GBR
AUT
AUT
AUT
AUT
AUT
AUTAUT
AUT
AUT AUTBEL
BEL
BEL
BEL
BEL
BELBELBEL
BEL
BELDNK
DNKDNK
DNKDNK
DNK
DNKDNK DNK
DNK
FRAFRA
FRA
FRA
FRA
FRAFRAFRAFRA
FRA
DEU
DEU
DEU
DEU
DEU
DEUDEU
DEU
DEU
DEUITAITA
ITA
ITAITA
ITA
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LUX
LUX
LUXLUX
LUX
LUXLUX
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NLD
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NLDNLD NLD
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NORNOR
NOR
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NOR
NOR SWE
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CHE CHE
CHE
CHECHE
CHECHE
CHECHE
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CAN
CAN CAN
CAN
CAN
CANCAN
CANCAN
CAN
JPN
JPN
JPN
JPN
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JPN
JPNJPN
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FIN
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FINFIN
FINFIN
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GRC
GRC
GRCGRC
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GRC
GRCGRC
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IRL
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MLT
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ESP
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ESP
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TURTUR TUR
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AUSAUSAUS
AUSAUS
AUSAUS
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NZL NZL
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NZLNZL
NZL NZL
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ARGARG
ARG
ARG
ARGARGARGARG
BOLBOL
BOLBOLBOL
BOLBOLBOLBOLBOL
BRA
BRABRA
BRABRA
BRABRA
BRABRABRA
CHL
CHL
CHLCHL
CHL
CHL CHL
CHLCHL
CHL
COL
COL
COLCOLCOL
COL
COLCOL
COLCOL
CRI
CRI
CRI
CRI
CRICRI
CRI
CRI CRI
CRI
DOM
DOM
DOMDOMDOM
DOMDOMDOMDOMDOM
ECU
ECUECU
ECUECUECUECUECUECUECU
SLV
SLVSLVSLV
SLVSLV
SLVSLV
SLV
SLV
GTMGTM
GTMGTM
GTM
GTMGTMGTM
GTMGTM
HTI
HTIHTI
HTI
HTI
HTI
HTI
HTIHTIHTI
HNDHNDHND
HNDHNDHNDHND
HND
HND
HND
MEX
MEXMEX
MEX
MEXMEX
MEXMEXMEXMEX
NIC
NIC
NIC
NICNIC
NIC
NICNIC
NICNIC
PAN
PAN
PAN
PANPANPANPAN
PANPANPANPRY
PRYPRY
PRY
PRYPRY
PRY
PRYPRYPRY
PER
PERPERPER
PERPERPERPERPER
PER
URY URYURYURYURYURYURYURY
URYURY
VEN
VEN
VENVEN
VENVEN
VENVENVENVEN
ATG
ATG
ATG
ATG
ATGATG ATG
ATGBHS
BHS
BHSBHS
BHS
BHSBHS
BHS
ABWABW
ABW
ABWABW
ABW ABW
ABWBRB
BRBBRB
BRB
BRB
BRB
BRBBRBBRB
BRB
GRD
GRD
GRD
GRD
GRD
GRDGRD
GRD
BLZ
BLZBLZ
BLZBLZ
BLZBLZ
BLZ
JAM
JAM
JAMJAM
JAM
JAMJAMJAM
JAM
JAM
CUW
LCALCALCA
LCALCA
LCA LCA
LCA
VCT
VCTVCT
VCT
VCTVCTVCT
VCT
SUR
SUR
SUR
SUR
SUR
SURSUR
SUR
TTO
TTO
TTO
TTO
TTO
TTO
TTO
TTO
TTO
TTO
BHR
BHR
BHR
BHR BHRBHR
BHR
BHR
CYP CYP
CYP
CYP
CYPCYP
CYP
CYPCYP
CYP
IRN
IRNIRN
IRN
IRN
IRN
IRN
IRN
IRN
IRN
IRQ
IRQ
IRQIRQIRQ
IRQIRQIRQ
ISRISR
ISR
ISR
ISR
ISRISR
ISRISR
ISRJOR
JOR
JOR
JOR
JOR
JORJOR
JORJOR
JOR
KWT
KWT
KWT
KWTKWT
KWTKWTKWT
LBNLBN
LBN LBNLBN
LBN
LBNLBN
OMNOMN
OMN
OMN
OMN
OMN
OMN
OMN
QAT
QATQAT
QAT
QAT
QAT
QAT
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SAUSAU
SAU
SAU
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SAUSAU
SAU
SYR
SYR
SYRSYR
SYR
SYR
SYRSYRSYR
SYR
ARE
AREARE
AREARE
ARE
ARE
ARE
EGYEGYEGY
EGYEGY
EGY
EGY
EGY
EGY
EGYYEM
YEM
YEM
YEMYEM
BGDBGD
BGD
BGDBGD
BGDBGDBGD
BGDBGD
BTN
BTNBTNBTN
BTN
BTN
BTN
BTN
BRN
BRNBRNBRNBRN
BRNBRNBRN
MMR
MMRMMRMMR
MMR
MMRMMR
MMR
MMRMMR
KHM
KHM
KHMKHM
KHM
KHM
KHM
KHM
LKALKA
LKA
LKALKALKA
LKALKA
LKA
LKA
HKG
HKG
HKG
HKG
HKGHKGHKG
HKG
HKG
HKGIND
INDINDINDINDIND
INDINDINDIND
IDN
IDN
IDN
IDNIDN
IDN IDN
IDN
IDNIDN
KOR
KOR
KORKORKOR
KOR
KOR
KORKORKOR
LAOLAO
LAOLAOLAO
LAO
LAOLAO
MAC
MAC
MACMAC
MAC
MAC
MAC
MAC
MYS
MYS
MYSMYS
MYS
MYSMYS
MYSMYS
MYS
MDV
MDV
MDV
MDV
MDV
MDVMDV
MDV
NPL
NPL
NPLNPLNPL
NPL
NPLNPL
NPL
NPL
PAKPAK
PAKPAKPAKPAK
PAK
PAKPAK
PAK
PHL
PHLPHLPHLPHLPHLPHLPHL
PHLPHL
SGP
SGPSGP
SGP
SGP
SGP
SGP
SGPSGPSGP
THA
THA
THA
THA
THA
THA
THATHATHATHA
VNM VNMVNMVNM
VNM
VNMVNM
VNM
DJI
DJI
DJIDJI
DJI
DJI
DJI
DJI
DZA
DZADZADZA
DZA
DZA
DZA
DZA
DZA
DZAAGOAGOAGO
AGOAGOAGOAGOAGO
BWA
BWABWABWA BWA
BWA
BWABWABWA
BWA
BDI
BDI
BDIBDI
BDIBDI
BDI
BDI
BDI
BDI
CMRCMRCMR
CMRCMRCMR
CMRCMRCMRCMR
CPV
CPV CPV
CPV
CPV
CPV
CPV
CPV
CPV
CPV
CAFCAFCAFCAFCAFCAF
CAFCAFCAF
CAF
TCDTCD
TCDTCDTCDTCDTCDTCDTCDTCD
COM
COMCOMCOMCOM
COM
COMCOMCOM
COM
COGCOGCOGCOG
COGCOGCOG
COGCOGCOGZARZARZARZARZARZARZARZARZARZAR
BENBENBEN
BENBENBENBENBEN
BENBEN
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
ETH
ETHETHETH
ETHETHETH
ETHETH
ETH
GAB
GABGAB
GAB
GABGAB
GAB
GABGAB
GAB
GMB
GMBGMBGMB
GMBGMBGMBGMB
GMBGMBGHAGHA
GHA
GHAGHAGHAGHAGHA
GHAGHA
GNBGNB
GNBGNBGNB
GNB
GNB
GNBGNBGNB
GIN
GIN
GIN
GINGINGIN
GINGINGINGIN
CIVCIVCIVCIVCIVCIVCIV
CIVCIV
CIV
KEN
KENKENKENKEN
KEN
KENKEN
KEN
KEN
LSOLSOLSOLSOLSO
LSOLSOLSO
LSOLSO
LBRLBRLBRLBRLBR
LBRLBRLBR
LBRLBR
MDG
MDGMDG
MDGMDG
MDGMDGMDG
MDGMDG
MWI
MWIMWIMWI
MWIMWI
MWIMWI
MWIMWI
MLIMLIMLIMLIMLI
MLI
MLIMLIMLI
MLI
MRT
MRTMRTMRTMRTMRT
MRTMRTMRTMRTMUS
MUSMUS
MUSMUS
MUS
MUSMUSMUSMUS
MAR
MAR
MARMAR
MAR MAR
MAR
MARMAR
MAR
MOZMOZMOZMOZ
MOZ
MOZ
MOZ
MOZMOZMOZ
NERNERNER
NERNERNERNER
NERNERNER
NGANGANGANGANGA
NGANGA
NGANGANGA
ZWE
ZWEZWEZWE
ZWEZWEZWEZWE
ZWEZWERWA
RWA
RWA
RWARWA
RWA
RWA
RWA
RWA
RWASTPSTPSTP
STP
STP
STPSTPSTP
SYC
SYC
SYCSYC
SYCSYC
SYCSYCSYC
SYC
SEN
SEN
SENSEN
SEN
SENSENSENSEN
SENSLE
SLESLESLE
SLE
SLE
SLESLE SLESLE
NAMNAM
NAMNAM
NAM
NAM
NAMNAMNAM
NAM
SDNSDNSDNSDNSDNSDN
SDNSDN
SWZSWZ
SWZSWZ
SWZ
SWZSWZSWZ
TZATZATZATZATZATZATZATZATZATZA
TGOTGOTGOTGOTGOTGO
TGOTGOTGO
TGO
TUN
TUNTUNTUNTUNTUN
TUNTUN
TUN
TUN
UGAUGAUGAUGAUGAUGAUGA
UGAUGA
UGA
BFABFABFABFABFA
BFA
BFABFABFABFA
ZMBZMBZMBZMBZMBZMBZMBZMBZMB
ZMB
FJI
FJI
FJI
FJIFJI
FJI
FJI
FJI FJI
FJI
ARM
ARMARMARM
AZE
AZE
AZE
AZE
BLR
BLRBLR
BLR
ALBALB
ALB
ALB ALB
ALB
ALBALB
GEO
GEO
GEO
GEOKAZ
KAZKAZ
KAZ
KGZ
KGZKGZ
KGZ
BGR
BGRBGR
BGR
BGRBGR
BGR
BGR
MDA
MDAMDA
MDARUS
RUS
RUS
RUSTJK
TJK
TJK
TJK
CHN
CHN
CHN
CHN
CHN
CHN CHN
CHN
CHN
CHN
TKM
TKMTKM
TKM
UKR
UKR
UKRUKR
UZB
UZBUZB
UZB CZECZE
CZE
CZE
SVKSVK
SVK
SVKEST
EST
EST
EST
LVA
LVA
LVA
LVA
SRBSRB
SRB
SRB MNEMNEMNEMNE
HUN
HUN
HUN
HUN
HUN
HUNHUN
HUNLTU
LTULTU
LTUMNG
MNGMNG
MNG
MNG
MNGMNG
MNG
HRVHRV
HRVHRV
SVNSVN
SVN
SVN
MKDMKDMKDMKD
BIHBIH
BIH
BIH
POL
POLPOL
POL
POL
POL
POL
POL
ROM
ROM
ROM
ROM
ROM
ROM
ROMROMROM
ROM
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_sh_
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Stylized facts of demographic changes
13
Figure 5: Relationship between change in old-age share vs. change in working-age share
(A) Non-aged countries (old-age share < 6.32)
TUR
TURTUR
TUR
TURTUR TUR
TUR
ZAF
ZAF ZAFZAF
ZAF
ZAF ZAF
ZAF
ZAFZAF
BOLBOL
BOL BOLBOL
BOLBOLBOL BOLBOL
BRA
BRABRA
BRABRA
BRABRA
BRABRA
CHL
CHL
CHLCHL
CHL
COL
COL
COLCOLCOL
COL
COLCOL
COLCOL
CRI
CRI
CRI
CRI
CRICRI
CRI
CRI
DOM
DOM
DOMDOMDOM
DOMDOMDOMDOMDOM
ECU
ECUECU
ECUECUECU ECUECUECUECU
SLV
SLVSLV SLV
SLVSLV
SLVSLV
GTMGTM
GTMGTM
GTM
GTMGTMGTM
GTMGTM
HTI
HTIHTI
HTI
HTI
HTI
HTI
HTIHTIHTI
HNDHND
HNDHNDHNDHND
HND
HND
HND
HND
MEX
MEXMEX
MEX
MEX MEX
MEXMEXMEXMEX
NIC
NIC
NIC
NICNIC
NIC
NICNIC
NICNIC
PAN
PAN
PAN
PANPANPANPAN
PANPRY
PRYPRY
PRY
PRYPRY
PRY
PRY PRYPRY
PER
PERPERPER
PERPER PER PERPER
VEN
VEN
VENVEN
VENVEN
VEN VENVENVEN
ATG
ATG
BHS
BHS
BHS BHS
BHS
BHS
ABW
BLZ
BLZBLZ
BLZBLZ
BLZBLZ
BLZ
JAM
JAM
JAMLCALCALCA
VCT
VCTVCT
SUR
SUR
SUR
SUR
SUR
SUR
TTO
TTO
TTO
TTO
TTO
TTO
TTO
BHR
BHR
BHR
BHR BHRBHR
BHR
BHR
IRN
IRNIRN
IRN
IRN
IRN
IRN
IRN
IRN
IRN
IRQ
IRQ
IRQIRQ
IRQIRQ
IRQIRQISR
JORJOR
JOR
JOR
JOR
JORJOR
JORJOR
JOR
KWT
KWT
KWT
KWTKWT
KWTKWTKWT
LBNLBN
LBN LBN
OMNOMN
OMN
OMN
OMN
OMN
OMN
OMN
QAT
QATQAT
QAT
QAT
QAT
QAT
QAT
SAUSAU
SAU
SAU
SAU
SAUSAU
SAU
SYR
SYR
SYRSYR
SYR
SYR
SYRSYRSYR
SYR
ARE
AREARE
AREARE
ARE
ARE
ARE
EGYEGYEGY
EGYEGY
EGY
EGY
EGY
EGY
EGY YEM
YEM
YEM
YEMYEM
BGDBGD
BGD
BGDBGD
BGDBGDBGD
BGDBGD
BTN
BTNBTNBTN
BTN
BTN
BTN
BTN
BRN
BRNBRNBRNBRN
BRNBRNBRN
MMR
MMRMMRMMR
MMR
MMRMMR
MMR
MMRMMR
KHM
KHM
KHMKHM
KHM
KHM
KHM
KHM
LKALKA
LKA
LKALKALKA
LKA
HKG
HKG
HKG
IND
INDINDINDINDIND
INDINDINDIND
IDN
IDN
IDN
IDNIDN
IDN IDN
IDN
IDNIDN
KOR
KOR
KORKOR KOR
KOR
LAOLAO
LAOLAOLAO
LAO
LAOLAO
MYS
MYS
MYSMYS
MYS
MYSMYS
MYSMYS
MYS
MDV
MDV
MDV
MDV
MDV
MDVMDV
MDV
NPL
NPL
NPLNPLNPL
NPL
NPL NPL
NPL
NPL
PAK PAK
PAKPAKPAKPAK
PAK
PAKPAK
PAK
PHL
PHLPHLPHLPHLPHLPHL PHL
PHLPHL
SGP
SGPSGP
SGP
SGP
SGP
THA
THA
THA
THA
THA
THA
THAVNM VNMVNMVNM
VNM
DJI
DJI
DJIDJI
DJI
DJI
DJI
DJI
DZA
DZADZADZA
DZA
DZA
DZA
DZA
DZA
DZAAGOAGOAGO
AGOAGOAGOAGOAGO
BWA
BWABWABWA BWA
BWA
BWABWABWA
BWA
BDI
BDI
BDIBDI
BDIBDI
BDI
BDI
BDI
BDI
CMRCMRCMR
CMRCMRCMR
CMRCMRCMRCMR
CPV
CPV CPV
CPV
CPV
CPV
CPV
CPV
CPV
CPV
CAFCAFCAFCAFCAFCAF
CAFCAFCAF
CAF
TCDTCD
TCDTCDTCDTCDTCDTCDTCDTCD
COM
COMCOMCOMCOM
COM
COMCOMCOM
COM
COGCOGCOGCOG
COGCOGCOG
COGCOGCOGZAR
ZARZARZARZARZARZARZARZARZAR
BENBENBEN
BENBENBEN
BENBENBENBEN
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
GNQ
ETH
ETHETHETH
ETHETHETH
ETHETH
ETH
GAB
GAB
GABGAB
GAB
GABGAB
GAB
GMB
GMBGMBGMB
GMBGMBGMBGMB
GMBGMBGHAGHA
GHA
GHAGHAGHAGHAGHA
GHAGHA
GNB GNB
GNBGNBGNB
GNB
GNB
GNB GNBGNB
GIN
GIN
GIN
GINGINGIN
GINGINGIN
GIN
CIVCIVCIVCIV
CIVCIVCIV
CIVCIV
CIV
KEN
KENKENKEN
KEN
KEN
KENKEN
KEN
KEN
LSOLSOLSOLSO LSO
LSOLSOLSO
LSOLSO
LBRLBRLBRLBRLBR
LBRLBRLBR
LBRLBR
MDG
MDGMDG
MDGMDG
MDGMDGMDG
MDGMDG
MWI
MWIMWI MWI
MWIMWI
MWIMWI
MWIMWI
MLI MLIMLIMLIMLI
MLI
MLIMLIMLI
MLI
MRT
MRTMRTMRTMRTMRT
MRTMRTMRTMRT
MUS
MUSMUS
MUSMUS
MUS
MUS
MAR
MAR
MARMAR
MAR MAR
MAR
MARMAR
MAR
MOZMOZMOZMOZ
MOZ
MOZ
MOZ
MOZMOZMOZ
NERNERNER
NERNERNERNER
NERNERNER
NGANGANGANGANGA
NGANGA
NGANGANGA
ZWE
ZWEZWEZWE
ZWEZWEZWEZWE
ZWEZWE
RWA
RWA
RWA
RWARWA
RWA
RWA
RWA
RWA
RWASTPSTPSTP
STP
STP
STPSTPSTP
SYC
SYC
SYC
SEN
SEN
SENSEN
SEN
SENSENSENSEN
SENSLE
SLESLESLE
SLE
SLE
SLESLE SLESLE
NAMNAM
NAMNAM
NAM
NAM
NAMNAMNAM
NAM
SDNSDNSDN
SDNSDN
SDN
SDNSDN
SWZSWZ
SWZSWZ
SWZ
SWZSWZSWZ
TZATZATZATZATZATZATZA
TZATZATZA
TGO TGOTGOTGOTGOTGO
TGOTGOTGO
TGO
TUN
TUNTUNTUN TUNTUN
TUN
UGAUGAUGAUGAUGAUGAUGA
UGAUGA
UGA
BFABFABFABFABFA
BFA
BFABFABFABFA
ZMBZMBZMB
ZMBZMBZMBZMBZMBZMB
ZMB
FJI
FJI
FJI
FJIFJI
FJI
FJI
FJI FJI
FJIAZE
AZE
AZE
AZEALBALB
ALB
ALBKGZ
KGZKGZ
KGZTJK
TJK
TJK
TJK
CHN
CHN
CHN
CHN
CHN
CHN CHNTKM
TKMTKM
TKM
UZB
UZBUZB
UZB
MNG
MNGMNG
MNG
MNG
MNGMNG
MNG
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USA
USA USA
USA
USA
USA
USA
USAUSA
USA
GBRGBR
GBR
GBR
GBR
GBR
GBR
GBRGBR
GBR
AUT
AUT
AUT
AUT
AUT
AUTAUT
AUT
AUTAUTBEL
BEL
BEL
BEL
BEL
BELBEL
BEL
BEL
BEL
DNK
DNK
DNK
DNKDNK
DNK
DNKDNK DNK
DNK
FRAFRA
FRA
FRA
FRA
FRAFRAFRAFRA
FRA
DEU
DEU
DEU
DEU
DEU
DEU
DEUDEU
DEU
DEUITA
ITA
ITA
ITAITA
ITA
ITA
ITAITA ITALUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
NLDNLD
NLD
NLD
NLD
NLD
NLDNLD
NLD
NLD
NOR
NOR
NOR
NORNOR
NORNOR
NORNOR
NOR SWE
SWESWE
SWESWE
SWE
SWE
SWE
SWE
SWE
CHECHE
CHE
CHE
CHE
CHE
CHE
CHE
CHE
CHE
CAN
CANCAN
CAN
CAN
CAN
CAN
CANCAN
CAN
JPN
JPN
JPN
JPN
JPN JPN
JPN
JPN
JPN
JPN
FIN
FIN
FIN
FIN
FIN
FIN
FINFIN
FIN
FIN
GRC
GRC
GRC
GRC
GRC GRC
GRC
GRCGRC
GRC
ISL
ISLISL
ISL
ISL
ISLISL
ISLISL
ISLIRLIRLIRL
IRLIRL
IRL
IRL
IRL
IRL
IRL
MLT
MLT
MLT
MLT
MLT
MLT
MLT
MLT MLT
MLTPRT
PRT
PRT
PRT
PRT PRT
PRT
PRT
PRTPRTESP
ESP
ESP
ESP
ESP ESP
ESP
ESP
ESP
ESP
TUR
TURAUSAUSAUS
AUS
AUS
AUS
AUS
AUSAUS
AUS
NZL NZL
NZL
NZL
NZL
NZL
NZL
NZL NZL
NZL
ARGARG
ARG
ARG
ARG
ARG
ARGARGARG
ARG
BRA
CHL CHL
CHLCHL
CHL
CRI
CRI
SLV
SLV
PANPAN
PER
URY URYURYURYURYURYURYURY
URYURY
ATG
ATG
ATGATG ATG
ATG BHS
BHS
ABW
ABW
ABW
ABW
ABW ABW
ABWBRB
BRB
BRB
BRB
BRB
BRB
BRBBRBBRB
BRB
GRD
GRD
GRD
GRD
GRD
GRD
GRD
GRD
JAM
JAM
JAM
JAMJAM
JAM
JAM
CUW
LCALCA
LCA LCA
LCAVCT
VCTVCTVCT
VCT SUR
SUR
TTO
TTO
TTO
CYP CYP
CYP
CYP
CYPCYP
CYP
CYP
CYP
CYPISR
ISR
ISR
ISR
ISRISR
ISRISR
ISR
LBN
LBN
LBNLBNLKA
LKA
LKA
HKG
HKG
HKGHKG
HKG
HKG
HKG
KOR
KORKORKOR
MAC
MAC
MAC
MAC
MAC
MAC
MAC
MAC
SGP
SGPSGP
SGP
THATHATHA
VNMVNM
VNM
GAB
GAB
MUSMUS
MUS
SYC
SYCSYC
SYCSYCSYC
SYC
TUNTUN
TUN
ARM
ARMARMARM
BLR
BLRBLR
BLRALB
ALB
ALB
ALB
GEO
GEO
GEO
GEO
KAZ
KAZ
KAZ
KAZ
BGR
BGR
BGR
BGR
BGRBGR
BGR
BGR
MDA
MDAMDA
MDARUS
RUS
RUS
RUS
CHN
CHN
CHNUKR
UKR
UKRUKR
CZE
CZE
CZE
CZE
SVKSVK
SVK
SVK
EST
EST
EST
EST
LVA
LVA
LVA
LVA
SRBSRB
SRB
SRB MNEMNEMNE
MNE
HUN
HUN
HUN
HUN
HUN
HUNHUN
HUNLTU
LTULTU
LTU
HRVHRV
HRV
HRV
SVNSVN
SVN
SVN
MKD
MKDMKDMKD
BIH
BIH
BIH
BIH
POL
POLPOL
POL
POL
POL
POL
POL
ROM
ROM
ROM
ROM
ROM
ROM
ROM
ROMROM
ROM
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(B) Aged countries (old-age share > 6.32)
Implication
• A simple linear regression may not reveal the true
association between population aging and economic
growth:
• When population aging is still at a low level, the “overall”
effect of population aging on economic growth may not
necessary be significantly negative because both
demographic dividend (due to the increasing share of
working-age population) and demographic burden (due
to the increasing share of old-age population) are at play.
• As population aging rate gets higher, its negative effects
grow stronger.
14
15
Empirical Specification
• Thus, Equation (4) also suggests that a country’s growth rate of per
capita GDP depends negatively on changes in youth-age and old-
age population.
• However, we do not know its exact functional form and hence we
utilize young and old age shares as percentages of total population
as well as young and old-age dependency ratios (i.e. young and old-
age population relative to working age population).
• As seen in Section 2, the association between population aging and
economic growth may not be linear and hence we also add a
quadratic term of the aging variable.16
Empirical Specification
17
Empirical Specification
18
Empirical Specification
Empirical Specification
✓ We use a panel data set of 142 countries for the period 1960-2014
✓ In order to minimize the yearly fluctuations due to business cycles, we use five-year averages of variables for eleven sub-periods of (1960-1964), (1965-1969), (1970-1974), (1975-1979), (1980-1984), (1985-1989), (1990-1994), (1995-1999), (2000-2004), (2005-2009), and (2010-2014).
✓ We then calculate the growth rates of GDP per capita for 5 year interval (i.e. 1 period interval) and 10 year interval (i.e. 2 period interval), using the Penn World Table version 9.0’s real GDP using national-accounts growth rates (RGDPNA)
✓ We control for country-fixed effects. We also include period dummies to take account of factors such as the global business cycle, global capital market shocks, and so forth.
✓ We assume that the productivity of the economy, ln(A), is a function of trade openness and time-invariant country fixed effects. 19
Benchmark results
20
21
VARIABLES (1) (2) (3) (4)
lnRGDPo t-1 -0.2120*** -0.2095*** -0.2090*** -0.2074***
[0.034] [0.034] [0.035] [0.035]
lnPop t-1 -0.1751*** -0.1683*** -0.1888*** -0.1811***
[0.054] [0.053] [0.056] [0.055]
YoungSh t-1 -0.0124*** -0.0105***
[0.003] [0.003]
YoungDep t-1 -0.0037*** -0.0033***
[0.001] [0.001]
OldSh t-1 -0.0197*** 0.0041
[0.006] [0.016]
OldSht-1*OldSht-1 -0.0010*
[0.001]
OldDep t-1 -0.0083** 0.0074
[0.003] [0.009]
OldDep t-1* OldDep t-1 -0.0005*
[0.000]
lnCap t-1 0.0567** 0.0596*** 0.0509** 0.0536**
[0.022] [0.022] [0.022] [0.022]
hc t-1 -0.0349 -0.0260 -0.0297 -0.0199
[0.049] [0.051] [0.048] [0.050]
lnTtrd t-1 0.0666** 0.0665** 0.0644** 0.0640**
[0.030] [0.031] [0.030] [0.031]
lnPop t - lnPop t-1 -0.0368 -0.0476 -0.0392 -0.0483
[0.260] [0.260] [0.259] [0.262]
YoungSh t - YoungSh t-1 -0.0136** -0.0134**
[0.006] [0.006]
YoungDep t - YoungDep -1 -0.0023 -0.0025
[0.002] [0.002]
OldSh t - OldSh t-1 -0.0342*** -0.0342***
[0.011] [0.011]
OldDep t - OldDep t-1 -0.0202*** -0.0191***
[0.006] [0.006]
lnCap t - lnCap t-1 0.1188*** 0.1203*** 0.1162*** 0.1177***
[0.036] [0.037] [0.036] [0.036]
hc t - hc t-1 -0.1603 -0.1512 -0.1639 -0.1543
[0.112] [0.113] [0.112] [0.113]
lnTtrd t - lnTtrd t-1 0.0784* 0.0790* 0.0776* 0.0777*
[0.045] [0.046] [0.045] [0.046]
Observations 1,144 1,144 1,144 1,144
Number of countries 142 142 0.354 0.347
R-squared 0.351 0.343 142 142
Table 1: Non-linear Effects of population aging on economic growthNon-linear effects of
population aging
Linear effects of
population aging
Notes: 1. Panel estimation with country-specific and period-specific effects. 2.
Robust standard errors are in parentheses. 3. ***, **, and * indicate the
significance levels of 1, 5, and 10 percent, respectively.
22
-.1
-.05
0
.05
Effe
cts
on
Lin
ea
r P
redic
tion
0 10 20 30L.old_sh
Average Marginal Effects of L.old_sh with 95% CIs
-.06
-.04
-.02
0
.02
Effe
cts
on
Lin
ea
r P
redic
tion
0 10 20 30 40L.old_dep
Average Marginal Effects of L.old_dep with 95% CIs
Old-age dependency ratio (Old_Dep)Old-age population share (Old_Sh)
Figure 6: Average marginal effects of population aging on economic growth at different levels of population aging
Effects of population aging in different periods of time
23
24
VARIABLES (1) (2) (3) (4) (5) (6)
lnRGDPo t-1 -0.2120*** -0.2095*** -0.1777*** -0.1748*** -0.1924*** -0.1886***
[0.034] [0.034] [0.049] [0.048] [0.036] [0.035]
lnPop t-1 -0.1751*** -0.1683*** -0.1680* -0.1642* -0.3060*** -0.3177***
[0.054] [0.053] [0.100] [0.093] [0.075] [0.077]
YoungSh t-1 -0.0124*** -0.0121*** -0.0096***
[0.003] [0.003] [0.003]
YoungDep t-1 -0.0037*** -0.0034** -0.0027***
[0.001] [0.001] [0.001]
OldSh t-1 -0.0197*** -0.0137 0.0033
[0.006] [0.011] [0.010]
OldSht-1*Period -0.0024***
[0.001]
OldDep t-1 -0.0083** -0.0037 0.0060
[0.003] [0.007] [0.005]
OldDep t-1* Period -0.0018***
[0.001]
lnCap t-1 0.0567** 0.0596*** -0.0039 -0.0033 0.0396* 0.0402*
[0.022] [0.022] [0.039] [0.039] [0.024] [0.024]
hc t-1 -0.0349 -0.0260 0.0154 0.0242 -0.0155 -0.0058
[0.049] [0.051] [0.068] [0.069] [0.045] [0.046]
lnTtrd t-1 0.0666** 0.0665** 0.0981*** 0.0993*** 0.0652** 0.0653**
[0.030] [0.031] [0.029] [0.030] [0.029] [0.030]
lnPop t - lnPop t-1 -0.0368 -0.0476 -0.3815 -0.4468 -0.0687 -0.0916
[0.260] [0.260] [0.504] [0.510] [0.258] [0.266]
YoungSh t - YoungSh t-1 -0.0136** -0.0087 -0.0125**
[0.006] [0.007] [0.006]
YoungDep t - YoungDep -1 -0.0023 -0.0010 -0.0024
[0.002] [0.003] [0.002]
OldSh t - OldSh t-1 -0.0342*** -0.0160 -0.0325***
[0.011] [0.017] [0.011]
OldDep t - OldDep t-1 -0.0202*** -0.0073 -0.0182***
[0.006] [0.011] [0.006]
lnCap t - lnCap t-1 0.1188*** 0.1203*** 0.1780** 0.1789** 0.1061*** 0.1061***
[0.036] [0.037] [0.071] [0.072] [0.037] [0.037]
hc t - hc t-1 -0.1603 -0.1512 -0.1143 -0.1037 -0.1466 -0.1363
[0.112] [0.113] [0.175] [0.172] [0.113] [0.114]
lnTtrd t - lnTtrd t-1 0.0784* 0.0790* 0.1241*** 0.1257*** 0.0787* 0.0798*
[0.045] [0.046] [0.045] [0.045] [0.045] [0.045]
Observations 1,144 1,144 725 725 1,144 1,144
Number of countries 142 142 134 134 142 142
R-squared 0.351 0.343 0.369 0.365 0.359 0.354Notes: 1. Panel estimation with country-specific and period-specific effects. 2. Robust standard errors are in
parentheses. 3. ***, **, and * indicate the significance levels of 1, 5, and 10 percent, respectively.
Whole sample
Table 3: Stronger effects of population aging on economic growth in recent years
Whole sample Before 1999
25
Old-age dependency ratio (Old_Dep)Old-age population share (Old_Sh)
Figure 7: Average marginal effects of population aging on economic growth at different periods of time
-.02
0
.02
.04
Effe
cts
on
Lin
ea
r P
redic
tion
1 2 3 4 5 6 7 8 9 10 11group(period)
Average Marginal Effects of L.old_sh with 95% CIs
-.02
-.01
0
.01
.02
Effe
cts
on
Lin
ea
r P
redic
tion
1 2 3 4 5 6 7 8 9 10 11group(period)
Average Marginal Effects of L.old_dep with 95% CIs
Effects of population aging in different groups of countries
26
27
VARIABLES
(1) (2) (3) (4)
lnRGDPo t-1 -0.0811* -0.0832* -0.2070*** -0.2041***
[0.044] [0.045] [0.040] [0.040]
lnPop t-1 -0.1129 -0.1092 -0.2046*** -0.1959**
[0.084] [0.090] [0.076] [0.076]
YoungSh t-1 -0.0071* -0.0108***
[0.004] [0.003]
YoungDep t-1 -0.0019 -0.0032***
[0.002] [0.001]
OldSh t-1 -0.0126*** -0.0170*
[0.004] [0.010]
OldDep t-1 -0.0063*** -0.0057
[0.002] [0.006]
lnCap t-1 -0.0091 -0.0010 0.0455* 0.0463*
[0.039] [0.042] [0.026] [0.026]
hc t-1 -0.0378 -0.0289 -0.0408 -0.0346
[0.059] [0.061] [0.057] [0.057]
lnTtrd t-1 0.0314 0.0301 0.0766** 0.0755**
[0.030] [0.030] [0.036] [0.036]
lnPop t - lnPop t-1 -0.3858 -0.4446* -0.0238 -0.0269
[0.236] [0.258] [0.280] [0.285]
YoungSh t - YoungSh t-1 -0.0127 -0.0120*
[0.009] [0.007]
YoungDep t - YoungDep -1 -0.0041 -0.0021
[0.004] [0.003]
OldSh t - OldSh t-1 -0.0127 -0.0260
[0.010] [0.021]
OldDep t - OldDep t-1 -0.0053 -0.0163
[0.005] [0.013]
lnCap t - lnCap t-1 0.1829*** 0.1889*** 0.1053*** 0.1056***
[0.046] [0.047] [0.038] [0.038]
hc t - hc t-1 -0.4625*** -0.4544*** -0.0909 -0.0817
[0.109] [0.110] [0.125] [0.126]
lnTtrd t - lnTtrd t-1 -0.0340 -0.0426 0.0889* 0.0892*
[0.047] [0.047] [0.048] [0.049]
Observations 265 265 879 879
Number of countries 29 29 113 113
R-squared 0.688 0.683 0.348 0.343
Table 5: Stronger Effects of population aging in developed countries
Notes: 1. Panel estimation with country-specific and period-specific effects. 2. Robust
standard errors are in parentheses. 3. ***, **, and * indicate the significance levels of 1, 5,
and 10 percent, respectively.
OECD countries Non-OECD countries
Summary and concluding remarks
• In summary, our major empirical findings and their implications are:
(i) Population aging hampers economic growth, mostly in countries where population aging has already reached a high level.
(ii) The negative impact of population aging on economic growth becomes greater as population aging deepens.
(iii) As the world continues to enter dramatically into population aging, the world, particularly the developed world, may face the challenge of sustaining growth.
28
Further implications
29
30
