The Relationship between economic growth and aging population in East Asia

Abstract

This study uses data from East Asian nations, including China, Japan, and South Korea, to analyze the relationship between population aging and economic growth. This study adopts the old age dependency ratio as a proxy for the aging population. The study apply threshold panel model to find the relationship between economic growth and aging population in East Asia nations. The result shows that there are two threshold effects in the relationship between the growth of old age dependency ratio and economic growth, and these are -0.22% and -0.26%. When the growth old age dependency ratio is less than -0.26%, there is no relationship between economic growth and an aging population. When the growth of old age dependency is between -0.26% and -0.22%, economic growth will decrease by 11.24% for every 1% rise in the growth of old age dependency ratio. When the growth of the old age dependency ratio is greater than -0.22%, there is a connection between economic growth and the aging population economic growth will increase by 7.49% for every 1% rise in the growth of old age dependency ratio. The study concludes that there is a nonlinear relationship between economic growth and aging populations. The ideal range for the growth of the old age dependency ratio is greater than -0.22%, and in this range, the influence on economic growth is positive.