Aging, Economic Growth, and Old-Age Security in Asia

Aging, Economic Growth, and Old-Age Security in Asia

Edited by Donghyun Park, Sang-Hyop Lee and Andrew Mason

First, the expert contributors argue, Asia must find ways to sustain rapid economic growth in the face of less favorable demographics, which implies slower growth of the workforce. Second, they contend, Asia must find ways to deliver affordable, adequate, and sustainable old-age economic security for its growing elderly population. Underpinned by rigorous analysis, a wide range of concrete policy options for sustaining economic growth while delivering economic security for the elderly are then presented. These include Asia-wide policy options – relevant to the entire region – such as building up strong national pension systems, while other policy options are more relevant to sub-groups of countries.

Chapter 2: Population, wealth, and economicgrowth in Asia and the Pacific

Andrew Mason and Sang-Hyop Lee

Subjects: asian studies, asian development, development studies, asian development, social policy and sociology, ageing

Extract

The Asia and Pacific region is extraordinarily diverse, but all of the economies are experiencing a demographic transition with important common features related to population size, growth, and age structure. In many of them, demographic change favors economic growth in both aggregate and per capita terms because working-age populations are growing more rapidly than dependent populations and are creating a demographic dividend. In a few economies in the region and in many more in the near future, however, the obviously favorable demographics are coming to an end. They will experience slower growth and then declines in their working-age populations and substantial increases in their old-age populations. We explored how these demographic changes are likely to influence economic growth and other features of Asia and the Pacific economies. Several key findings emerged. Many Asia and the Pacific countries including Bangladesh, India, Indonesia, Pakistan, and the Philippines will continue to experience a demographic dividend as their working-age populations grow relative to their dependent populations. Favorable conditions should persist for at least the next 15 years and, in most cases, for much longer. The magnitude of the demographic dividend depends on age patterns of labor income and consumption. For most countries, estimates of these patterns are not available, but based on the eight Asia and the Pacific economies for which age profiles have been constructed, a substantial demographic dividend can be expected. Over time, the populations of Asia and the Pacific will become increasingly concentrated at older ages where in all cases labor income is quite modest. In part this reflects low levels of employment at older ages, but it also reflects low wages and productivity for older adults who are working.

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