Study On The Effects Of Population Aging To Regional Economic Development

Population ageing is a process in which the rate of elderly people to total population is rising. It is the change of age structure which shows the tendency and process of aging population growth in a region or a country. According to the international general rule, if the rate of the population with the age of 60 years old and over to total population is above 10% or the rate of the population with the age of 65 years old and over to total population is above 7% in a society, it will be called an aging society. Population ageing is the important and realistic problem to be confronted by human society in 21 century which has respect to social development such as economy, society, family life and personal life cycle etc. There is a population problem in every country, but the population problem exists in different forms in various regions and periods. Population ageing is an inevitable phenomenon during the population development, which has an intrinsic relationship with regional economic growth. Because production and consumption are important fields in regional economy, population ageing has influence on both production and consumption and necessarily has effects on economic development. Scientific development is oriented to people. Therefore, this paper has some significance in theory and practice.By applying with the methods such as qualitative and quantitative analysis, theoretical and empirical study, situation and forecast analysis, time series and spatial analysis to study the effect of population ageing on regional economic growth basing on the data from 1989 to 2008 and the period of demograghic dividend in Shandong province, it has found that: (1) The higher economic development level in a region, the more serious degree of population ageing. The degree of population aging is rapidly deepened while the economic level is developing. (2) From the production perspective, population aging affects the effective labor supply and labor productivity, so that it has the corresponding economic effects to regional development by the application of economic growth theory. On the one hand, population aging has a role in the regional economic development through influencing the size of working-age population, labor force participation rate, employment rate and the effective utilization of labor; on the other hand, population aging has influence on the regional economic output through improving labor quality, human capital accumulation, technological progress and capital deepening. Therefore, the ultimate impact of population aging on regional economic development depends on the comparison between the negative effects on labor supply and the positive effects on labor productivity from the production perspective. (3) From the consumption perspective, population aging affects the social aggregate demand to have the corresponding economic effects on regional development by the application of macroeconomic national income theory. On the one hand, the elderly population decreases the final demand of society through participation in the national income distribution. On the other hand, the deepening of the degree of population aging will change the ratio of the four components of aggregate demand which are consumption, investment, government purchase and net export to affect the capacity and direction of regional economic output. Therefore, the final outcome of population aging depends on the comparison between the positive effects of consumption and the negative effects of investment and consumption of other groups in society. (4) According to the mechanism and ways of population aging to regional economic development, the paper extends the neoclassical growth model by putting the aging factor into the model from the production and consumption perspectives. By the application of the extended economic growth model to analyze the effects of population aging on regional economic development, it has found that Population ageing has bidirectional effects on regional economic growth which are positive effects and negative effects. Population aging has 0.77 units of positive effects through the consumption of old people and 0.24 units of negative effects through the expenditure of pension and medical treatment on regional economic growth. So that, at present population ageing can't alter the direction of regional economic growth, but can bring slowdown effect to some extent. With the deepening of aging degree, the negative effects will be more and more obvious. If it has exceeded the positive effects, population aging will change the direction of regional economic development. (5) Population aging has different impacts on regional economic output in the long run and in the short run. In the long run, there is a cointegration relationship between the proportion of elderly population and growth of GDP basing on the data of Shandong province in 1989-2007, which is a long-term stable equilibrium relationship. Error correction model (ECM) has showed that the 6% deviation of actual annual economic output from its long-run equilibrium value will be revised in the short run. Besides, population aging have also had different influences on regional labor supply and demand, savings, consumption, national income distribution, pension expenses, medical expenses, and industrial structure.In short, population aging has a broad and profound impact on the regional economy. Furthermore its impact on regional economic development will be more evident in the long run. In essence, population aging is not the ultimate decisive factor in economic development, but it has a certain deceleration effect to regional economic development.The paper aims to find out the mechanism and mode of population ageing to regional economic growth, objectively evaluate the direct, indirect and total effects of population ageing, quantitatively analyze and forecast the effects of population ageing on economic output, labor, consumption, savings, allocation of national income, expenditure of pension and medical treatment as well as industry structure, put forward policy suggestions for regions and China to response to the challenges of population ageing to regional economic growth so that they can realize the welfare maximization of social security while minimizing the economic slowdown effect of population ageing.