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The Effects of the Demographic Crisis on Economic Growth from 1980 to 2022 in Bulgaria

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  • Stoycho Rusinov

Abstract

The demographic crisis in Bulgaria, marked by the shrinking population, has significant implications for economic growth. This study examines these effects from 1980 to 2022 through the lens of neoclassical economics and empirical modeling. While the crisis is usually associated with negative consequences, the article reveals a potentially counterintuitive phenomenon: the overestimation of labor productivity, estimated at nearly 60% and caused by the demographic crisis, leads to the so-called “growth illusion†. The article shows that the demographic crisis artificially inflates productivity indicators, thus concealing the poor quality of production and threatening long-term economic stability. The results highlight the need for policies to address the structural challenges of the labor market and the confirmed overestimation of its productivity.

Suggested Citation

  • Stoycho Rusinov, 2024. "The Effects of the Demographic Crisis on Economic Growth from 1980 to 2022 in Bulgaria," Ikonomiceski i Sotsialni Alternativi, University of National and World Economy, Sofia, Bulgaria, issue 4, pages 143-156, December.
    • Handle: RePEc:nwe:iisabg:y:2024:i:4:p:143-156
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    More about this item

    Keywords

    economic growth; robustness tests; labor productivity; production quality; productivity overvaluation;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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