The impact of population aging on economic growth

<p>Nowadays almost in all countries we can face with a low fertility rate and high life expectancy. As a result, the share of elderly people in the population increases, and the share of working age population decreases. So, the world population is ageing. The question is what their influence on economic performance is. Population ageing is a very important process, as it affects all aspects of people&#39;s lives. It is necessary to analyze the demographic situation in the country and in the whole world to make the right decisions concerning the interests of the whole society: education, healthcare, pension and insurance systems and others. Therefore, this issue has become an urgent priority.</p><p>The aim of graduation work is to study the aging population and its economic consequences. The object of this work is the demographic aging of the population, and the subject - the effect of population aging on economic growth. To achieve the goal of research three tasks are designed as follows:</p><p>1) To study the phenomenon of population aging, its reasons and the main methods of evaluation;</p><p>2) To examine the main trends of population ageing in the world nowadays and determine the impact of population ageing on economic development of countries;</p><p>3) To study the impact of ageing on economic growth, based on macroeconomic and econometric models.</p><p>Consistent with the purpose and tasks, the work is divided into two parts: theoretical and empirical. Chapter 1 gives a brief overview of the main causes of demographic ageing and the main indicators of this process. In Chapter 2 the trend of population aging in the world from the 1950s to the present day, and the UN projections to 2050 is described. The Chapter 3 is devoted to the economic growth and its main drivers. Chapter 4 begins by laying out the theoretical model of the research, and looks at how population aging effects on economic growth. Chapter 5 describes the empirical analysis of the impact of population ageing on economic growth based on panel data from 38 countries over the last 22 years (1990-2012).</p><p>Economic data are obtained from United Nationsdatabase and other data (demography and schooling) are extracted from the World Development Indicators published by the World Bank. The practical part of work is carried out with the help of the statistical software packages &quot;MS Excel&quot; and &quot;Stata&quot;.</p><p>It was found, that there is no unequivocal opinion about the influence of population aging on economic growth. We have investigated the theoretical Romer model (1990) adding new variable human capital and determined that the relationship between population aging and economic growth is negative.</p><p>However, the regression analysis has showed that population aging affects nonlinearly on economic growth, despite the fact that many economists and demographers argue that the link between aging and economic growth is linear. The result of our study is an &laquo;inverted U&raquo; curve showing the relationship between economic growth and population aging. Thus, the growth of the share of Old increases economic growth firstly, but then economic growth begins to fall gradually. Thereby, economists, who claim that there is a positive relationship and the authors, who hold a pessimistic view, were to some extent true, but only within certain limits.</p><p>In addition, we can conclude that economic growth begins to fall, when the proportion of people aged 65 years and over exceeds about 10% of the total population. And consistent with the demographic situation in the world, when in 2013 the proportion of Old was 11.7%, and by 2050 it will reach 21.1% of the world&#39;s population, it can be assumed that economic growth will moderately decline.</p>