The Effects of Population Aging on GDP

Abstract

The intensification of population aging affects all aspects of society. Among them, it has a particular impact on economic growth. Some scholars believe that aging will stimulate economic development, while more people believe that aging will burden the economy. Based on research on the five major gross domestic product factors: consumption, investment, government spending, net exports, and the labor market, the aging population brings more harmful effects to the growth of gross domestic production rather than optimistic effects. The aging population only benefits the government expenditure that the government consumes and invests more funds in the aging population. The increasing government expenditure directly raises the gross domestic product. By contrast, the excessive government spending will trigger more critical fiscal problems. Thus, compared with the negative impact on GDP in other areas, the increase in government spending cannot offset those adverse impacts. The government has to take steps to balance the plethora of adverse effects.