Demographic Structure, Human Capital, and Economic Growth: Evidence from Turkey

Abstract

Purpose: The aim of this study is to examine the long-run and short-run impact of demographic structure and human capital on the economic growth of Turkey. Theoretical framework: The shift in demographic dividend which witness shifts in age structures, have led to positive prospects, which have resulted in the decline in rate of births leading to a decline in a country’s young dependent group, and subsequently caused an increase in the percentage of the workforce working-age numbers. In the past few decades, there has been a noticeable substantial shift in the population structure with regard to the percentage of the cohort of working age population in Turkey that could have consequences on the economy. Design/Methodology/Approach: The annual time series data of Turkey for the time period 1990 to 2020 was employed through the utilization of Autoregressive Distributed Lag (ARDL) model to investigate the association between the demographic structure, human capital and economic growth. Findings: The results revealed that variations in the age structure, as manifested by the variations in the age cohorts of the working-age population, possess substantial favorable impacts on economic growth in the short and long run. The research also revealed that human capital impacts on economic growth in a positive way in the short run. Research, practical & social implications: The study revealed that there is a substantial shift in the population fabric in Turkey. The ongoing changes that have transpired relatively rapidly might have significant economic consequences for the country in the future. Hence, it is therefore recommended that Turkey acquire demographic and economic measures which will stimulate the population to be intensively involved in the workforce. This is to garner the gains of demographic and educational returns as a major method towards the attainment of a high level of economic growth. Originality/Value: This study utilizes working age population more broadly than most of the literature, using disaggregated age groups based on age. The key motivation for this is to ascertain the role of each age group, and its effect on economic growth.