| Abstract [eng] |
Population Aging and its Effects on Economic Growth in Lithuania 73 pages, 10 charts, 16 pictures, 72 references. The main purpose of this master’s thesis is to analyse population aging and its economic effects in Lithuania. The thesis consists of three main parts; literature and population aging trend analysis, research and its results, and conclusions and recommendations. Literature analysis reviews the main concepts and causes of population aging and describes its potential economic effects on capital and labour markets, consumption and savings, fiscal policy, and other areas, highlighting the fact that they may range from negative to positive depending on various country-specific factors. The population aging trend analysis explores various demographic ratios in Lithuania and shows that population aging has been evident over the past few decades and will most probably continue in the future. The goal of the research was to answer the question whether population aging has any effect on Lithuania‘s gross domestic product (GDP) and household consumption per capita, as well as labour activity rate. Using the old-age dependency ratio (OADR) as a measure for population aging, the study was carried out by developing a vector error correction model (VECM) and then deriving an autoregressive distributed lag (ADL) model from it using R programming language. It was determined that an increase in OADR growth rate tends to cause a slowdown in the activity rate growth rate. In addition, ADL‘s cointegrating coefficients showed that population aging also has a a negative effect on household consumption per capita, as it tends to decrease when the labour activity rate declines. The results of the research may be explained by the fact that employment and activity rates in older age groups are usually lower than in the younger ones due to lack of qualification and fewer job opportunities for older workers. When it comes to household consumption, its decrease in an aging population might be explained by the lesser needs of older individuals who tend to consume less than the working age population. Moreover, the working age population may also have to decrease consumption expenditure due to an increase in their tax burden. Conclusions summarise the main ideas and insights from literature and population aging trend analysis, as well as cover the main results of the research. The conclusions are followed by a few recommendations and suggestions that may help to reduce the economic impact of population aging by improving the professional qualifications of older workers and promoting, as well as supporting, investment in education. |
