Main Article Content
Abstract
Purpose ― This study aims to examine the impact of population aging and fertility rates on economic growth in Malaysia for the sample spanning from 1961 to 2020.
Method ― The study uses an Autoregressive Distributed Lagged (ARDL) model to examine the relationship between economic growth, the aging population, fertility rate, capital stock, and employment rate.
Findings ― The main results provide evidence of a long-run relationship between aging, fertility rate, employment, and capital stock on Malaysian economic growth. The results also show that the aging population harms economic growth in the long run, but a decline in the fertility rate has been favorable to long-term economic growth.
Implication ― These findings have significant implications for the execution and formulation of national aging and demographic policies and government efforts to achieve long-term fiscal sustainability.
Originality ― This study empirically investigated the link between population aging and economic development, reflecting recent demographic trends in Malaysia. This study uses current data and an Autoregressive Distributed Lagged (ARDL) technique to analyze long-term economic growth and its association with supply-side determinants
Keywords
Article Details
Copyright (c) 2023 Zulkefly Abdul Karim, Nurul Aqilah Mohd Nuruddin, Bakri Abdul Karim, Massita Mohamad, Ismahalil Ishak
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References
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- Auerbach, A. J., & Kotlikoff, L. J. (1987). Evaluating fiscal policy with a dynamic simulation model. The American Economic Review, 77(2), 49–55.
- Barro, R. J. (1996). Determinants of economic growth: A cross-country empirical study (w5698; NBER Working Paper).
- Barro, R. J. (2013). Health and economic growth. Annals of Economics and Finance, 14(2), 329–366.
- Beaudry, P., & Collard, F. (2003). Recent technological and economic change among industrialized countries: Insights from population growth. The Scandinavian Journal of Economics, 105(3), 441–464. https://doi.org/10.1111/1467-9442.t01-2-00007
- Bhargava, A., Jamison, D. T., Lau, L. J., & Murray, C. J. L. (2001). Modeling the effects of health on economic growth. Journal of Health Economics, 20(3), 423–440. https://doi.org/https://doi.org/10.1016/S0167-6296(01)00073-X
- Bloom, D. E., & Finlay, J. E. (2009). Demographic change and economic growth in Asia. Asian Economic Policy Review, 4(1), 45–64. https://doi.org/10.1111/j.1748-3131.2009.01106.x
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- Bucci, A. (2015). Product proliferation, population, and economic growth. Journal of Human Capital, 9(2), 170–197. https://doi.org/10.1086/680861
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- Göbel, C., & Zwick, T. (2012). Age and productivity: Sector differences. De Economist, 160(1), 35–57. https://doi.org/10.1007/s10645-011-9173-6
- Harrod, R. F. (1939). An essay in dynamic theory. The Economic Journal, 49(193), 14–33. https://doi.org/10.2307/2225181
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- Hviding, K., & Mérette, M. (1998). Macroeconomic effects of pension reforms in the context of ageing populations (201; OECD Economics Department Working Papers, Issue 201). https://doi.org/10.1787/638376177076
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- Lisenkova, K., Merette, M., & Wright, R. (2012). The impact of population aging on the labor market: Evidence from overlapping generations computable general equilibrium (OLG-CGE) model of Scotland (1213; Working Papers, Issue 1213). https://econpapers.repec.org/RePEc:str:wpaper:1213
- Lorentzen, P., McMillan, J., & Wacziarg, R. (2008). Death and development. Journal of Economic Growth, 13(2), 81–124. https://doi.org/10.1007/s10887-008-9029-3
- Manabu, S., & Hosoyama, H. (2004). Economic implications of an aging population: The case of five Asian economies (117; ESRI Discussion Paper Series).
- Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. The Quarterly Journal of Economics, 107(2), 407–437. https://doi.org/10.2307/2118477
- Miles, D. (1999). Modeling the impact of demographic change upon the economy. The Economic Journal, 109(452), 1–36. https://doi.org/10.1111/1468-0297.00389
- Nor, N. N. F. M. (2018). Trend penuaan penduduk: Satu sorotan karya (Trend of Ageing Population: Literature Review). E-BANGI, 13(2), 116–130.
- Oliver, M. (2015). Population aging and economic growth in Japan. International Journal of Sociology and Social Policy, 35(11/12), 841–863. https://doi.org/10.1108/IJSSP-02-2015-0018
- Pesaran, M. H., Shin, Y., & Smith, R. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association, 94(446), 621–634. https://doi.org/10.1080/01621459.1999.10474156
- Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289–326. https://doi.org/10.1002/jae.616
- Peterson, E. W. F. (2017). The role of population in economic growth. SAGE Open, 7(4), 1–15. https://doi.org/10.1177/2158244017736094
- Powell, J. L., & Cook, I. G. (2009). Global aging in comparative perspective: A critical discussion. International Journal of Sociology and Social Policy, 29(7/8), 388–400. https://doi.org/10.1108/01443330910975696
- Prettner, K. (2013). Population aging and endogenous economic growth. Journal of Population Economics, 26(2), 811–834. https://doi.org/10.1007/s00148-012-0441-9
- Romer, P. M. (1994). The origins of endogenous growth. The Journal of Economic Perspectives, 8(1), 3–22. https://doi.org/10.1257/jep.8.1.3
- Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94. https://doi.org/10.2307/1884513
- Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2), 334–361. https://doi.org/10.1111/j.1475-4932.1956.tb00434.x
- Taasim, S. (2020). Aging population and economic growth: Evidence from Malaysia. South Asian Journal of Social Studies and Economics, 7(4), 11–18. https://doi.org/10.9734/sajsse/2020/v7i430196
- United Nations. (2019a). World population ageing 2019. In the United Nations Digital Library System. http://link.springer.com/chapter/10.1007/978-94-007-5204-7_6
- United Nations. (2019b). World population prospects, 2019.
- United Nations. (2020a). World fertility and family planning 2020: Highlights.
- United Nations. (2020b). World population aging 2020 highlights: Living arrangements of older persons.
- Weil, D. N. (2007). Accounting for the effect of health on economic growth. The Quarterly Journal of Economics, 122(3), 1265–1306. https://doi.org/10.3386/w11455
References
Aiyar, M. S., & Ebeke, M. C. H. (2016). The impact of workforce aging on European productivity (WP/16/238; IMF Working Paper).
Auerbach, A. J., & Kotlikoff, L. J. (1987). Evaluating fiscal policy with a dynamic simulation model. The American Economic Review, 77(2), 49–55.
Barro, R. J. (1996). Determinants of economic growth: A cross-country empirical study (w5698; NBER Working Paper).
Barro, R. J. (2013). Health and economic growth. Annals of Economics and Finance, 14(2), 329–366.
Beaudry, P., & Collard, F. (2003). Recent technological and economic change among industrialized countries: Insights from population growth. The Scandinavian Journal of Economics, 105(3), 441–464. https://doi.org/10.1111/1467-9442.t01-2-00007
Bhargava, A., Jamison, D. T., Lau, L. J., & Murray, C. J. L. (2001). Modeling the effects of health on economic growth. Journal of Health Economics, 20(3), 423–440. https://doi.org/https://doi.org/10.1016/S0167-6296(01)00073-X
Bloom, D. E., & Finlay, J. E. (2009). Demographic change and economic growth in Asia. Asian Economic Policy Review, 4(1), 45–64. https://doi.org/10.1111/j.1748-3131.2009.01106.x
Bloom, D. E., Kuhn, M., & Prettner, K. (2018). Health and economic growth (11939; IZA Discussion Paper). https://doi.org/10.2139/ssrn.3301688
Bloom, D. E., & Luca, D. L. (2016). The global demography of aging: Facts, explanations, future. In J. Piggott & A. B. T.-H. of the E. of P. A. Woodland (Eds.), Handbook of the economics of population ageing (Vol. 1, pp. 3–56). North-Holland. https://doi.org/10.1016/bs.hespa.2016.06.002
Boachie, M. K. (2017). Health and economic growth in Ghana: An empirical investigation. Fudan Journal of the Humanities and Social Sciences, 10(2), 253–265. https://doi.org/10.1007/s40647-016-0159-2
Brown, R. L., Durbin, J., & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37(2), 149–192.
Bucci, A. (2015). Product proliferation, population, and economic growth. Journal of Human Capital, 9(2), 170–197. https://doi.org/10.1086/680861
Department of Statistics Malaysia. (2021). Current Population Estimates, Malaysia, 2021.
Domar, E. D. (1946). Capital expansion, rate of growth, and employment. Econometrica, Journal of the Econometric Society, 14(2), 137–147. https://doi.org/10.2307/1905364
Feyrer, J. (2007). Demographics and productivity. The Review of Economics and Statistics, 89(1), 100–109. https://doi.org/10.1162/rest.89.1.100
Fougère, M., & Mérette, M. (1999). Population ageing and economic growth in seven OECD countries. Economic Modelling, 16(3), 411–427. https://doi.org/10.1016/S0264-9993(99)00008-5
Göbel, C., & Zwick, T. (2012). Age and productivity: Sector differences. De Economist, 160(1), 35–57. https://doi.org/10.1007/s10645-011-9173-6
Harrod, R. F. (1939). An essay in dynamic theory. The Economic Journal, 49(193), 14–33. https://doi.org/10.2307/2225181
Huang, W.-H., Lin, Y.-J., & Lee, H.-F. (2019). Impact of population and workforce aging on economic growth: Case study of Taiwan. In Sustainability (Vol. 11, Issue 22, p. 6301). https://doi.org/10.3390/su11226301
Hviding, K., & Mérette, M. (1998). Macroeconomic effects of pension reforms in the context of ageing populations (201; OECD Economics Department Working Papers, Issue 201). https://doi.org/10.1787/638376177076
Ismail, N. W., Rahman, H. S. W. A., & Hamid, T. A. T. A. (2015). Does population ageing affect economic growth in Malaysia? Prosiding PERKEM, 10, 205–210.
Krug, E. G., Mercy, J. A., Dahlberg, L. L., & Zwi, A. B. (2002). The world report on violence and health. The Lancet, 360(9339), 1083–1088. https://doi.org/10.1016/S0140-6736(02)11133-0
Lindh, T., & Malmberg, B. (1999). Age structure effects and growth in the OECD, 1950-1990. Journal of Population Economics, 12(3), 431–449.
Lisenkova, K., Merette, M., & Wright, R. (2012). The impact of population aging on the labor market: Evidence from overlapping generations computable general equilibrium (OLG-CGE) model of Scotland (1213; Working Papers, Issue 1213). https://econpapers.repec.org/RePEc:str:wpaper:1213
Lorentzen, P., McMillan, J., & Wacziarg, R. (2008). Death and development. Journal of Economic Growth, 13(2), 81–124. https://doi.org/10.1007/s10887-008-9029-3
Manabu, S., & Hosoyama, H. (2004). Economic implications of an aging population: The case of five Asian economies (117; ESRI Discussion Paper Series).
Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A contribution to the empirics of economic growth. The Quarterly Journal of Economics, 107(2), 407–437. https://doi.org/10.2307/2118477
Miles, D. (1999). Modeling the impact of demographic change upon the economy. The Economic Journal, 109(452), 1–36. https://doi.org/10.1111/1468-0297.00389
Nor, N. N. F. M. (2018). Trend penuaan penduduk: Satu sorotan karya (Trend of Ageing Population: Literature Review). E-BANGI, 13(2), 116–130.
Oliver, M. (2015). Population aging and economic growth in Japan. International Journal of Sociology and Social Policy, 35(11/12), 841–863. https://doi.org/10.1108/IJSSP-02-2015-0018
Pesaran, M. H., Shin, Y., & Smith, R. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association, 94(446), 621–634. https://doi.org/10.1080/01621459.1999.10474156
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289–326. https://doi.org/10.1002/jae.616
Peterson, E. W. F. (2017). The role of population in economic growth. SAGE Open, 7(4), 1–15. https://doi.org/10.1177/2158244017736094
Powell, J. L., & Cook, I. G. (2009). Global aging in comparative perspective: A critical discussion. International Journal of Sociology and Social Policy, 29(7/8), 388–400. https://doi.org/10.1108/01443330910975696
Prettner, K. (2013). Population aging and endogenous economic growth. Journal of Population Economics, 26(2), 811–834. https://doi.org/10.1007/s00148-012-0441-9
Romer, P. M. (1994). The origins of endogenous growth. The Journal of Economic Perspectives, 8(1), 3–22. https://doi.org/10.1257/jep.8.1.3
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94. https://doi.org/10.2307/1884513
Swan, T. W. (1956). Economic growth and capital accumulation. Economic Record, 32(2), 334–361. https://doi.org/10.1111/j.1475-4932.1956.tb00434.x
Taasim, S. (2020). Aging population and economic growth: Evidence from Malaysia. South Asian Journal of Social Studies and Economics, 7(4), 11–18. https://doi.org/10.9734/sajsse/2020/v7i430196
United Nations. (2019a). World population ageing 2019. In the United Nations Digital Library System. http://link.springer.com/chapter/10.1007/978-94-007-5204-7_6
United Nations. (2019b). World population prospects, 2019.
United Nations. (2020a). World fertility and family planning 2020: Highlights.
United Nations. (2020b). World population aging 2020 highlights: Living arrangements of older persons.
Weil, D. N. (2007). Accounting for the effect of health on economic growth. The Quarterly Journal of Economics, 122(3), 1265–1306. https://doi.org/10.3386/w11455