Hitotsubashi Institute for Advanced Study


Nonlinear Effects of Population Aging on Economic Growth?


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 elated to economic growth in linear way.

Report No.: HIAS-E-86
Author(s): Hyun-Hoon Lee(a)
Kwanho Shin(b)
Affiliation: (a) Kangwon National University, Republic of Korea
(b) Korea University, Republic of Korea
(c) Hitotsubashi Institute for Advanced Study, Hitotsubashi University
Issued Date: April 2019
Keywords: population aging, working-age population, economic growth, nonlinearity, developed countries
JEL: J11, O47, O57