Abstract
Taiwan’s population is aging at a fast pace, and its aged society is expected to transition into a hyper-aged society within eight years. Population aging has been a matter of international concern; however, there remain differing views about its economic impact. Thus, this study aims to examine the impact of population and workforce aging on Taiwan using quarterly data from 1981–2017. The empirical results demonstrate that an aging workforce has a significantly positive impact on the rate of economic growth. However, the old-age dependency ratio has a significantly negative effect on economic growth. The empirical findings indicate that human capital is essential for total factor productivity (TFP) growth and that workforce and population aging mainly impact productivity through TFP. Accounting for policy factors, increasing the supply of the eldercare workforce and foreign manpower contribute toward countering the negative impact of an aging population on national economic growth. Policies on retirement, pension systems, health care, and human capital accumulation that target the aged population are discussed, accompanied by policy suggestions.
Highlights
The World Health Organization (WHO) defines an aging society as one where more than 7% of the population is aged 65 years or above, an aged society as one in which this age group accounts for more than 14% of the total population, and a hyper-aged society as one wherein this rate is greater than 20%
The results show that an aging workforce is significantly and positively related to Gross Domestic Product (GDP) growth rate
In the level form, the augmented Dickey–Fuller (ADF), PP, and KPSS tests all indicate the time series is non-stationary for all the variables except for investment rate (Invest)
Summary
The World Health Organization (WHO) defines an aging society as one where more than 7% of the population is aged 65 years or above, an aged society as one in which this age group accounts for more than 14% of the total population, and a hyper-aged society as one wherein this rate is greater than 20%. (Taiwan): 2016–2061 published by the National Development Council, Taiwan is expected to become a hyper-aged society by 2026. Taiwan’s population is aging at a fast pace, and its aged society is expected to transition into a hyper-aged society within eight years. According to estimates by the National Development Council, Taiwan’s aging rate is significantly greater than those in Japan (11 years), Canada (14 years), the United States (16 years), France (29 years), Germany (37 years), and the United Kingdom (51 years). South Korea (9 years) reports a similar aging rate (see Table 1)
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