Volume 3(2014)

PAGE 1/10

Does an Ageing Population Diminish or Enhance Economic Growth? : A Survey of Literature:

Sivalap Sukpaiboonwat, Sutida Plyngam**, Jirawat Jaroensathapornkul***

* Corresponding author, Lecturer, School of Economics and Public Policy, Srinakharinwirot University, Bangkok, Thailand.
** Lecturer, School of Economics and Public Policy, Srinakharinwirot University, Bangkok, Thailand.
*** Assistant professor, School of Economics and Public Policy, Srinakharinwirot University, Bangkok, Thailand.

Abstract

This paper is in line with the theme of survey literatures of ageing society and economic growth. Its knowledge border is also reached into diminish and enhance the growth. The former illustrates the causes of the negative impacts of old population on growth. It reveals that low fertility, long life expectancy, low consumption as well as high public spending on health care lead aggregate output growth decline in the long run. Meanwhile, the latter attempts to explain the hypotheses of why aging agent can contribute the economic growth. The key issue is the human capital accumulation according to the proposition of replicated economy. Further, the elderly factors positively affect the economic growth via increase in the effective labor, knowledge transfer as well as change in saving patterns. In conclusion, tracking down the previous researches, the conceptual framework is contributed. It is schematically represented the linkages underlying the effects of aging population on economic growth.

Keywords: Elderly population, Economic Growth, Human capital

1. Introduction

Nowadays, people are living longer and the rate of mortality has continuously declined as health care has improved. Additionally, the fertility rate of populations around the world has continued to decrease. As a result of this demographic change in many countries, especially developed nations such as Japan, the problem of ageing populations cannot be ignored or avoided.

The most important impact of ageing population is the economic problem of having more retired people than laborers. This means the dependency burden will be increased and it will be a chronic problem. Therefore, we should be awakened to the need for policy reform to prevent the effects of ageing populations on economic growth.

The pessimistic views warn countries about the need for reform of government policy in terms of public expenditure and managing the government budget. However, there are many literature reviews which have shed some light on how to solve these problems. They are presented by the role of human capital and the role of expanded labor by increased female labor and extended the age of retirement.

The answers as to whether ageing populations diminish or contribute to economic growth are ambiguous. Furthermore, a great deal of research in many countries has attempted to clarify the effect of ageing population on economic growth. However, there is no framework to show the mechanism of ageing population and whether it has a positive or negative effect on economic growth.