IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2011-038.html
   My bibliography  Save this paper

The Demographic Dividend: Evidence from the Indian States

Author

Listed:
  • Mr. Ashoka Mody
  • Mr. Shekhar Aiyar

Abstract

Large cohorts of young adults are poised to add to the working-age population of developing economies. Despite much interest in the consequent growth dividend, the size and circumstances of the potential gains remain under-explored. This study makes progress by focusing on India, which will be the largest individual contributor to the global demographic transition ahead. It exploits the variation in the age structure of the population across Indian states to identify the demographic dividend. The main finding is that there is a large and significant growth impact of both the level and growth rate of the working age ratio. This result is robust to a variety of empirical strategies, including a correction for inter-state migration. The results imply that a substantial fraction of the growth acceleration that India has experienced since the 1980s - sometimes ascribed exclusively to economic reforms - is attributable to changes in the country’s age structure. Moreover, the demographic dividend could add about 2 percentage points per annum to India’s per capita GDP growth over the next two decades. With the future expansion of the working age ratio concentrated in some of India’s poorest states, income convergence may well speed up, a theme likely to recur on the global stage.

Suggested Citation

  • Mr. Ashoka Mody & Mr. Shekhar Aiyar, 2011. "The Demographic Dividend: Evidence from the Indian States," IMF Working Papers 2011/038, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/038
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=24660
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Higgins, Matthew, 1998. "Demography, National Savings, and International Capital Flows," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 343-369, May.
    2. Bloom, David E. & Canning, David & Fink, Gunther & Finlay, Jocelyn E., 2007. "Does age structure forecast economic growth?," International Journal of Forecasting, Elsevier, vol. 23(4), pages 569-585.
    3. David E. BLOOM & Jocelyn E. FINLAY, 2009. "Demographic Change and Economic Growth in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 4(1), pages 45-64, June.
    4. David E. Bloom & David Canning & Pia N. Malaney, 1999. "Demographic Change and Economic Growth in Asia," CID Working Papers 15, Center for International Development at Harvard University.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas Lindh, 2004. "Medium-term forecasts of potential GDP and inflation using age structure information," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 23(1), pages 19-49.
    2. Diane Macunovich, 2012. "The role of demographics in precipitating economic downturns," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 783-807, July.
    3. Kopecky, Joseph, 2023. "Population age structure and secular stagnation: Evidence from long run data," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    4. Kogel, Tomas, 2005. "Youth dependency and total factor productivity," Journal of Development Economics, Elsevier, vol. 76(1), pages 147-173, February.
    5. Bloom, David E. & Canning, David & Hu, Linlin & Liu, Yuanli & Mahal, Ajay & Yip, Winnie, 2010. "The contribution of population health and demographic change to economic growth in China and India," Journal of Comparative Economics, Elsevier, vol. 38(1), pages 17-33, March.
    6. Shekh Farid & Mamata Mostari, 2022. "Population transition and demographic dividend in Bangladesh: extent and policy implication," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(1), pages 108-126, June.
    7. Barry Bosworth & Gabriel Chodorow-Reich, 2007. "Saving and Demographic Change: The Global Dimension," Working Papers, Center for Retirement Research at Boston College wp2007-02, Center for Retirement Research, revised Feb 2007.
    8. Lar, Ni & Taguchi, Hiroyuki, 2020. "Population Age Structure, Saving Rate impacts on Economic Growth: Myanmar Case," MPRA Paper 102336, University Library of Munich, Germany.
    9. David E. BLOOM & Jocelyn E. FINLAY, 2009. "Demographic Change and Economic Growth in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 4(1), pages 45-64, June.
    10. Durr-e-Nayab, 2008. "Demographic Dividend or Demographic Threat in Pakistan?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(1), pages 1-26.
    11. Terrie Walmsley & Angel Aguiar & Syud Amer Ahmed, 2017. "Labour Migration and Economic Growth in East and South-East Asia," The World Economy, Wiley Blackwell, vol. 40(1), pages 116-139, January.
    12. Antonio Golini & Anna Di Bartolomeo, 2009. "The impact of a massive migration flow on the regional population structure: The case of Italy," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 7(1), pages 149-165.
    13. Joshua Adeyemi Ogunjimi & Dauda Olarotimi Oladipupo, 2019. "Dynamics of Demographic Structure and Economic Growth in Nigeria," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 6(2), pages 186-196.
    14. David E. Bloom & David Canning, 2004. "Global demographic change : dimensions and economic significance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 9-56.
    15. Joshua Adeyemi Ogunjimi & Dauda Olarotimi Oladipupo, 2019. "Dynamics of Demographic Structure and Economic Growth in Nigeria," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 6(2), pages 186-196.
    16. Hajamini, Mehdi, 2015. "The non-linear effect of population growth and linear effect of age structure on per capita income: A threshold dynamic panel structural model," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 43-58.
    17. Joseph Kopecky Author-1-Name-First: Joseph Author-1-Name-Last: Kopecky, 2023. "Population age structure and secular stagnation: Evidence from long run data," Trinity Economics Papers tep0526, Trinity College Dublin, Department of Economics.
    18. Zhang, Haifeng & Zhang, Hongliang & Zhang, Junsen, 2015. "Demographic age structure and economic development: Evidence from Chinese provinces," Journal of Comparative Economics, Elsevier, vol. 43(1), pages 170-185.
    19. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "Economic Growth and the Demographic Transition," NBER Working Papers 8685, National Bureau of Economic Research, Inc.
    20. Barry P. Bosworth & Ralph C. Bryant & Gary Burtless, 2004. "The Impact of Aging on Financial Markets and the Economy: A Survey," Working Papers, Center for Retirement Research at Boston College 2004-23, Center for Retirement Research.

    More about this item

    Keywords

    WP; age ratio; growth rate;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2011/038. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.