Impact of Population Ageing on Economic Growth in Emerging EU Countries

Abstract

This study aims to investigate the effect of one of the most prominent contemporary changes in demographic structure, population ageing, on the economic performance of eight emerging economies from Central and Eastern Europe. Despite experiencing relatively high economic growth, these countries are still striving to catch up with the more advanced European economies (which are used as the control group). Concurrently, they are facing significant population ageing. Using the Pooled Mean Group estimator in the panel ARDL model, the study finds that a one percent increase in the old dependency ratio results in a 0.52 percent decrease in GDP per capita growth rate and a 0.53 percent decrease in GDP growth rate in the long term. The gross capital formation rate and the gross savings positively impact per capita economic growth in the short term, whereas the labour force participation rate’s impact on the GDP growth varies across the country groups. The findings underscore the importance of implementing active ageing programs, creating fiscal buffers, fostering lifelong learning, and promoting employment among vulnerable groups to mitigate the adverse effects of population ageing on economic growth in emerging economies.