Education rather than age structure brings demographic dividend

Kebede, Endale Birhanu and Lutz, Wolfgang and Crespo Cuaresma, Jesus and Fürnkranz-Prskawetz, Alexia (2019) Education rather than age structure brings demographic dividend. Proceedings of the National Academy of Sciences (PNAS), 116 (26). pp. 12798-12803. ISSN 1091-6490

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Abstract

The relationship between population changes and economic growth has been debated since Malthus. Initially focusing on population growth, the notion of demographic dividend has shifted the attention to changes in age structures with an assumed window of opportunity that opens when falling birth rates lead to a relatively higher proportion of the working-age population. This has become the dominant paradigm in the field of population and development, and an advocacy tool for highlighting the benefits of family planning and fertility decline. While this view acknowledges that the dividend can only be realized if associated with investments in human capital, its causal trigger is still seen in exogenous fertility decline. In contrast, unified growth theory has established human capital as a trigger of both demographic transition and economic growth. We assess the relative importance of changing age structure and increasing human capital for economic growth for a panel of 165 countries during the time period of 1980-2015. The results show a clear dominance of improving education over age structure and give evidence that the demographic dividend is driven by human capital. Declining youth dependency ratios even show negative impacts on income growth when combined with low education. Based on a multidimensional understanding of demography that considers education in addition to age, and with a view to the additional effects of education on health and general resilience, we conclude that the true demographic dividend is a human capital dividend. Global population policies should thus focus on strengthening the human resource base for sustainable development.

Item Type: Article
Additional Information: This research received funding from the European Union's Horizon 2020 research and innovation program under Grant Agreement 741105, project name The Demography of Sustainable Human Wellbeing, Empowered Life Years. This article contains supporting information online at www.pnas.org/lookup/suppl/doi:10. 1073/pnas.1820362116/-/DCSupplemental.
Keywords: demography, Economic growth, education, age structure
Divisions: Departments > Sozioökonomie > Sozialpolitik > Demographie > Wittgenstein Centre
Version of the Document: Published
Depositing User: Gertraud Novotny
Date Deposited: 02 Jul 2019 08:47
Last Modified: 02 Jul 2019 08:48
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/91362/
URI: https://epub.wu.ac.at/id/eprint/7020

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