Abstract
Increased life expectancy combined with declining birth rates and massive emigration flows have caused many to worry about the various impacts of an ageing population in Lithuania. This suggests a very big increase in the dependency ratio and is consequently a cause for concern about a future slowing of economic growth. However, there is little research carried out regarding economic or financial effects of this phenomenon in the country. The aim of this paper is to evaluate the impact of Lithuanian ageing population on economic variables. A new research design is implemented by using VAR and ARMAX models to compare two different approaches, treating ageing as an endogenous and exogenous variable. The authors find that old age dependency ratio has no statistically significant impact on Lithuania’s GDP growth, employment rate, final household consumption and gross national savings in the short run. The results achieved can be explained by incomplete and only short run data available for Lithuania. Also, joining the EU and other favorable economic conditions might have boosted Lithuania’s economic performance over the whole research period and significantly reduced the negative effects of ageing population. However, the impact of shifts in the structure of population age might soon come into effect, as Lithuania‘s society is gathering the pace of ageing, which is also seen in other emerging markets that are progressing toward becoming advanced.
Highlights
Many countries are experiencing a rapid ageing of their populations
As there is li le research investigating the economic outcomes of demographic shi s in the country, this research aims to evaluate the impact of Lithuanian ageing population on the main economic variables: GDP growth, employment rate, nal household consumption and gross national savings. e originality of the paper comes from the comparison of two di erent approaches: the authors evaluate the impact of ageing on economic variables in both endogenous and exogenous terms
There is li le empirical evidence about the magnitude of population ageing e ects on the country‘s economic indicators
Summary
Many countries are experiencing a rapid ageing of their populations. It is increasingly becoming one of the main topics on the agendas of many international organizations, governments and scienti c institutions. It might seem that the ageing population is a challenge faced by developed countries as a result of improving health care and living condi-. In the context of ageing population, Lithuania is not an exception. Improvements in living standards and health care have led to an increase in life expectancy. The share of the elderly is increasingly growing, while the proportion of young people in the country is decreasing, due to the high emigration rates of working age population
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