Abstract
This study examines the impacts of population aging on a wide range of economic indicators from a regional perspective. Many countries, including the United States, are experiencing demographic aging. This may have a dramatic impact on both the national and sub-national economies. However, there is little consensus about its impact on local sub-national economies. This study uses regional variation in age structure to explain economic outcomes at the metropolitan statistical areas (MSAs) level. In order to identify causal effects, Mahalanobis distances were calculated to identify the matched cities as instrumental variables. The study finds that regions with older age structures tend to have higher growth rates of GDP per capita and lower growth rates of unemployment, but such positive effects are likely to fade away in the long run. Additionally, there is no significant impact of age composition on income. The choice of variables is critical as it can lead to mixed results. The results are robust before, during and after the economic recession. Quantile regression is also used to explore potential heterogeneous effects among MSAs. The results show that MSAs, regardless of their size, are uniformly affected by the age structure.
Highlights
This study examines the impacts of population aging on a wide range of economic indicators from a regional perspective
I begin by estimating ordinary least square (OLS) regressions to explore the relationship between age profiles and economic outcomes
It was surprising to find that labor force participation rates are not affected by age compositions
Summary
This study examines the impacts of population aging on a wide range of economic indicators from a regional perspective. Many countries, including the United States, are experiencing demographic aging This may have a dramatic impact on both the national and sub-national economies. “With every mouth God sends a pair of hands.” This old saying provides a good starting point for thinking about the impact of population on economic growth. The sheer volume of the total population has been growing steadily over the past years, the composition of the population, including gender, race and ethnicity, has dramatically changed. These trends can be still expected to continue in the future (Ortman et al, 2014). Very little attention has been paid to this age variation at the sub-national level
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