Demographic dividend in Saudi Arabia: From age structural changes to economic gains

Abstract

Aim/purpose – The demographic dividend, defined as the proportion of working age to the rest of the population, is an opportunity seen mainly in developing countries, result- ing from demographic transition. Efforts to maximize gains from it are crucial, especial- ly for the Arabian Gulf states, where labor force demands are met at the danger of native youth unemployment that leads to issues of human resources utilization. This research on Saudi Arabian demographic dividend aims at tracking changes in the age structure, labor force participation, and prospects leading to economic gains. Design/methodology/approach – Data from various sources such as censuses (1974, 1992, 2004, and 2010), national labor force surveys 1999-2017 and United Nations (UN) Population Prospects are compiled and statistically analyzed with a historical approach for calculations of age distribution, median age, and labor force participation adopting standard procedures. Findings – An age structural transition occurred: percentage of population 15-64 years increased from 47.2% to 67.3%, increasing the dividend from 89.6% to 205.5%. This influenced the labor force’s sectoral distribution, and Gross Domestic Product (GDP) per working age population. Research implications/limitations – The dividend’s first phase, since 2000, is expected to last until 2050, followed by the second dividend which may last longer. Along with the dividend, there shall be policies executed to reap the benefits, including scientifically planned recruitment of potential candidates in various professions, both in public and private sectors. Originality/value/contribution – This research concerns a population, which is unex- plored in detail, especially at a macro level. Thus, such an in-depth analysis seeks im- portance in revealing special demographic dimensions to a wider international audience. There are no such studies conducted in Saudi Arabia, with a national perspective helpful for revamping efforts to boost labor force reforms and to make maximum gain during the short-lived demographic dividend period. Keywords: demographic transition, accounting effect, age-sex structure, labor force, median age. JEL Classification: B55, J10.