Population Aging and the Possibility of a Middle-Income Trap in Asia
Ha, Joonkyung; Lee, Sang-Hyop | February 2018
Abstract
We present three conditions for a demography-driven middle-income trap and show that many economies in East, South, and Southeast Asia satisfy all of them. The conditions are (1) support ratio—the ratio of workers to consumers—matters for economic growth, (2) economic development accompanies more investment in human capital and lower fertility due to the quantity–quality tradeoff, and (3) current low level of fertility corresponds to too low support ratios for keeping up with the frontier economies in the long run. The panel analyses for 178 countries, among which 30 are ADB developing member economies, show that (i) and (ii) are satisfied for Asia with higher elasticity than others. As for (iii), we set up a dynamic model for simulations, showing that about two-thirds of ADB members have unsustainable level of support ratios, implying possibilities of a middle-income trap due to demographic headwinds in the future.
Citation
Ha, Joonkyung; Lee, Sang-Hyop. 2018. Population Aging and the Possibility of a Middle-Income Trap in Asia. © Asian Development Bank. http://hdl.handle.net/11540/7917. License: CC BY 3.0 IGO.ISSN
2313-6537 (print)
2313-6545 (electronic)
Keywords
Crisis
Unemployment
Economic cooperation
Gross domestic product
Employment
Economic forecast
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Economic Crisis
Economic Efficiency
Economic Policies
Regional Economic Development
Job Evaluation
Evaluation
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Economic Welfare
Economic Incentives
Financial crisis
Labor economics
Regional economics
Turnover
Economic survey
Job analysis
Labor turnover
International relief
Exports
Economic development projects
Economic policy
Economic forecasting
Show allCollapse