The Effect of Population Aging on Long Run Economic Growth of Developed Countries

Population aging sprung from longevity and low total fertility rates has been present in the developed OECD member countries since the 1970s and it has been accelerating. Although multitudinous empirical and theoretical studies have been done with respect to the effects of population aging on economic growth, the arguments are conflict and diffuse. This impedes seeking for a solution and policy making with an integrated vision. This being the case, this paper both theoretically and empirically investigated the main mechanisms of the conflict arguments to generalize the effects of population aging on economic growth for the policy implication. The empirical results demonstrate that an increase in life expectancy has negative effects on economic growth whereas low fertility rates have positive effects on economic growth supporting the human capital theory.