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Malaysia is approaching the aging society status, raising concern about whether population aging is a challenge or an opportunity for Malaysia to attain higher economic growth. Using state-level data from 2011 to 2021, the results show that population aging is negatively associated with economic growth. The economic impact of population aging is substantial and larger than the conventional determinant of economic growth. Further analysis reveals that the growth-deteriorating effect of population aging is transmitted through the labor force and productivity growth channels. The findings urge policymakers to recognize the scope of the new demographic reality and adjust policies to address the economic implications of population aging.

Asia is aging, although there is significant heterogeneity across subregions and economies. Population aging poses two strategic challenges for the region: sustaining economic growth and delivering old-age economic security. In this paper, we leverage the lifecycle perspective—that individuals’ consumption and labor income differ at each age—and the National Transfer Accounts database to construct and analyze key economic indicators. Our analysis confirms that demographic change will challenge the region’s future growth and increase the cost of funding the consumption of the elderly. We also find that it will have a substantial impact on the public finances of some Asian economies.

Japan is the oldest society in the world. It has the highest proportion of the population aged 65 and over, a demographic indicator that has been used by demographers for more than a century. One of the main objectives of this study is to apply a new indicator—the cognition-adjusted dependency ratio (CADR)—to remeasure the level of population aging from an innovative point of view. To compute this new index, we apply the mean age-group-specific immediate recall scores for Japan and four other Asian countries, and we compare the results with those derived from the United States and various developed nations in Europe. Our analysis shows that Japan’s pattern and level of age-related decline in cognitive functioning are highly comparable to those of many other developed nations, particularly in Continental Europe. Among the other Asian countries, Malaysia shows a pattern of change similar to countries in Southern Europe, although Malaysia has slightly lower scores than Southern Europe in all age groups. More importantly, these comparative results based on CADR are astonishingly different from the corresponding results obtained from conventional old-age dependency ratios. The Japanese case is the most salient example.

In responding to the challenge of rapid population aging in Asia, promoting healthy and active aging has become a key policy priority in many countries. There is an opportunity to realize a “silver demographic dividend” by harnessing the potential of healthy and productive older people. This paper presents the findings of a regional comparative study that quantifies the health capacity to work of older persons in seven East Asian and Southeast Asian countries. Along with improvements in the health status of older Asians over time, the additional (or untapped) working capacity of older men aged 55–64 years is estimated to have increased by 0.74 years on average over the past 15 years, with substantial variation across countries, gender, and other individual characteristics. For example, additional work capacity increased by 0.24 years in Japan and Viet Nam during the review period and by 2.24 years in the People’s Republic of China. In contrast, additional work capacity declined by 0.17 years in Indonesia. The proportion of all men aged 60–64 who are not working but are able to do so ranges from 7.8% (Viet Nam) to 21.1% in Figure 8 (Malaysia), with the proportion even higher for men in their late 60s. Older adults with higher levels of education and those living in urban areas generally have greater untapped work capacity. The potential silver demographic dividend, measured by the aggregate untapped work capacity of older workers above retirement age, is significant and has the potential to boost the gross domestic product of many countries in the region.

Using the Milligan and Wise (2015) and Cutler, Meara, and Richards-Shubik (2013) methodologies, we examine (i) how much would people today with a given mortality rate or life expectancy work if they were to work as much as those with the same mortality rate worked in the past, and (ii) how much could older adults extend their working lives if their health status improved. The results point to a sizable health capacity to work (HCW) among both older Korean men and women. Furthermore, the results imply that HCW is concentrated among more educated urban senior residents with access to the statutory pension system. We explain our results in the context of the Republic of Korea’s labor markets and old-age support systems. The results for the Republic of Korea imply that the previous results for other high-income economies, such as European countries and the United States, may not be applicable to high-income economies with underdeveloped pension systems.

Thailand’s aging population has impacted its labor force. This study examines additional health capacity to work (AHCW) with established methods. Data were obtained from the mortality registry as well as national health, aging, labor force, and welfare surveys. Utilizing the Milligan–Wise method, the estimated AHCW for those aged 50–69 was 1.3 years (an 8.7% increase) for males and 1.9 years (17.8%) for females, based on the 2005 employment–mortality relationship. With the Cutler–Meara–Richards-Shubik method, the estimated AHCW for those aged 60–69 in 2015 ranged from 0.9 years (13.6%) to 2.0 years (31.3%) for males and from 1.2 years (23.2%) to 1.5 years (29.6%) for females. We also found that older informal workers in Thailand need to work to maintain their standards of living due to limited retirement benefits. Effective policy measures should be implemented to protect informal workers’ health, prevent pensioners from being impoverished, facilitate a more flexible working environment, and help workers maintain skills and job competencies.

This paper employs an overlapping-generations (OLG) model with altruistic motive and lifetime uncertainty to investigate the urban public pension system in China. Focusing on the case of Beijing, we examine the effects of the individual contribution rate, firm contribution rate, life expectancy and population growth rate on the capital-labor ratio, savings, per capita consumption and pension benefits. By controlling the firm contribution rate to adjust the capital-labor ratio of the market economy to the modified golden rule level, we find the optimal firm contribution rate. We also discuss the optimal firm contribution rate in Beijing under three cases: risen life expectancy, fallen population growth rate and the joint case of risen life expectancy and fallen population growth rate, and estimate the optimal firm contribution rate in 2020s. Integrating the established effects and the current economic goals, it is concluded that it will do more good than harm to strictly implement Beijing municipal population policy, improve the living and medical conditions, reduce the firm contribution rate, and raise the individual contribution rate.

Using 30 years of the South Korean household income and expenditure surveys (HIES) from 1982 to 2011, this paper argues that Korea experienced significantly differing generational trends in consumption and income inequality when taking demographic changes related to population aging into account. While income inequality stagnated or slightly rose over the past two generations, consumption inequality in fact declined. These antagonistic trends are likely due to better access of poorer households to financial markets as well as the gradual expansion of the welfare state. In the absence of appropriate policies, rapid population aging will substantially increase overall inequality in the future.

In this paper, I find (1) that Japan showed massive and persistent current account surpluses from at least 1981 until at least 2011, (2) that Professor Ronald McKinnon was correct, at least in the case of Japan, and that these large and persistent current account surpluses were due primarily to Japan’s large and persistent IS imbalances (the excess of saving over investment), (3) that the specific causes of the IS imbalances have changed dramatically over time, and (4) that future trends in Japan’s IS imbalances (current account surpluses) are difficult to project but that they will probably not change dramatically in either direction in the foreseeable future.

In this paper, I investigate the effects of changes in demand structure caused by population aging on the Japanese economy using a multi-sector new Keynesian model with job creation/destruction analysis. I consider upward revisions in forecast for the speed of Japanese population aging as unexpected shocks to its demand structure. I find that the shocks caused around 0.3% point deflationary pressure on year-to-year inflation, 0.3% to 0.4% point increase in unemployment rates, and 1.8% point decrease in real GDP from the early 1990s to the 2000s in Japan. I also find that the repetition of such upward revisions made those effects look more persistent.

Population aging and the middle-income trap are serious problems felt worldwide, especially in terms of their powerful influence on economic growth. In order to explore the relationships among population aging, middle-income trap, and economic growth, this study uses a panel data of 27 economies in Asia from 1995 to 2016. The primary finding of this study is that lower-middle-income economies are facing the problem of middle-income trap, indicating that the economic growth rates of lower-middle-income economies are slowing down. In addition, population aging has a statistically significant and negative influence on the growth rate of GDP in the high-income economies, but it has a statistically significant and positive influence on the growth rate of GDP in the low-income and lower-middle-income economies. This study suggests that increasing women’s labor participation, technology innovation, and immigration could solve the problems of population aging and the middle-income trap.

This paper investigates the threshold effects of population aging on economic growth using country-level panel data covering 98 countries from 1970 to 2015. The overall estimation results indicate significant nonlinear effects on economic growth of the share of the elderly in the total population, with the estimated threshold between 10.1% and 10.9%. Beyond the threshold, deeper population aging begins to have negative effects on economic growth. Second, most of the threshold effects comes from the group of non-OECD countries, i.e., low-income countries, while the insignificant and delayed threshold effects are found in OECD countries, i.e., high- and middle-income countries. Third, as net capital inflows grow, particularly by the debt type, they can increase long-run economic growth in OECD countries, while they overall cause to deteriorate it in non-OECD countries. And finally, for the OECD countries, the positive impacts of capital inflows on growth are partially cancelled out as heightening in degree of population aging. These findings are overall robust to alternative measure of population aging, old-age dependency ratio and alternative country groups such as using US$7,000 in GDP per capita 1990 as reference income level. These results suggest that sufficient human capital investment, adoption of high technologies, and development of economic institutions including financial and foreign exchange markets are recommended in response to upcoming negative effects of population aging on economic growth especially for low-income country.

Although CO₂ emissions are purely global externalities and unlikely to be addressed by individual countries, empirical attention has typically been on the national level as national efforts have come in to plug the gap. The contribution of this study is therefore to investigate the effect of population aging on CO₂ emissions, controlling for income and fossil fuel energy consumption, using panel data of 25 OECD countries during 1980–2015. After applying the panel cointegration approach such as fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS), we discover that population aging appears to reduce CO₂ emissions, ceteris paribus. We also confirm the existence of the environmental Kuznets curve (EKC) relationship with an inverted-U curve, where CO₂ emissions increase with income level until it reaches the estimated turning point and then starts to turn down. Other evidence shows that fossil fuel energy consumption increases CO₂ emissions, other things equal. We believe that these findings present sustainable policy directions that may help solve the problem of population aging our world is dealing with today.

We consider models for population structured by maturation/maturation speed proposed by Rotenberg. It is a variant of transport equations for age-structured populations which presents particularly interesting mathematical difficulties. It allows one to introduce more stochasticity in the birth process and in the aging phenomena. We present a new method for studying the time asymptotics which is also illustrated on the simpler McKendrick–Von Foerster model. The nonlinear variants of these models are shown to exhibit either nonlinear stability or periodic solutions depending on the datum.

The global financial crisis and the response to it have contributed to a sharp increase in public indebtedness in a large number of countries. While there have been episodes of high debt in the past, there are a number of long-term challenges today that are likely to complicate the implementation of sustainable fiscal policies in the coming years. Population ageing and climate change are factors that are likely to contribute to rising fiscal pressures and the crisis has highlighted the risks and vulnerabilities stemming from reduced fiscal space. This paper argues that heightened fiscal challenges can only be dealt successfully by adopting a long-term fiscal planning horizon. The paper analyzes a range of available policy tools that countries have used in the past to improve fiscal management.

We study the effects of projected population aging on potential growth in Asian economies over the period 2015–2050. We find that an increase in the share of the population over 64 years of age will significantly lower output growth through decreased labor participation. Population aging can also reduce economic growth through increased labor income taxes and dampened productivity growth.

The present study first examines the trends in age structural shifts in selected Asian economies over the period 1950–2050 and analyzes their impact on economic growth in terms of the first and second demographic dividends computed from the system of National Transfer Accounts. Then, using the National Transfer Accounts, we analyze the effect of the age structural shifts on the pattern of intergenerational transfers in Japan; the Republic of Korea; and Taipei,China. A brief comparison of the results reveals that, in the next few decades, the latter two are likely to follow in Japan's footsteps by increasing public transfers and asset reallocations, and by reducing familial transfers, particularly among older persons. Next, we consider a newly defined demographic dividend, which is generated through the use of the untapped work capacity of healthy older persons and to which we refer as “the silver” or “the third” demographic dividend. By drawing upon microlevel datasets obtained from Japan and Malaysia, we calculate the magnitude of the impact of that dividend on macroeconomic growth in each of the two economies, concluding that while in Japan the expected effect is substantial, in Malaysia it will take several decades before the country can enjoy comparable benefits.

Subjective social status (SSS), the self-perception of one’s places in socio-economic hierarchies, is an important predictor of self-rated health (SRH). As population aging has been a global trend, there is a growing scholarly interest to show whether and how SSS is associated with SRH among the elderly population. In this research, we attempted to investigate such association among the elderly in China, the country with the world’s largest aging population that is now facing an imminent elderly challenge. Drawing on the pooled national representative survey data from Chinese General Social Survey and provincial-level socio-economic statistics from the China Statistical Yearbook from 2005 to 2015, we conducted the statistical analysis at both micro (individual) level and macro (provincial) level. The results from both levels consistently suggested that, in China, SSS is a central source of SRH among old people. The higher the SSS, the better the SRH.

We study the endogenous relationship between health care, life expectancy and output in a neoclassical growth model. While health care competes resources away from goods production, it prolongs life expectancy which, in turn, leads to higher capital accumulation through a private annuity market. We show that savings and health care are complements in equilibrium, with both rising with economic development. Our model is therefore consistent with several stylized facts, namely: (i) countries spend more on health care as they prosper, (ii) individuals in rich countries tend to live longer, and (iii) population aging is more pronounced in rich countries. Moreover, via the longevity-enhancing channel, health care and health production technology are found by simulation to be growth- and welfare-promoting.