The Demographic Dividend: Evidence from the Indian States

 
Author/Editor: Aiyar, Shekhar ; Mody, Ashoka
 
Publication Date: February 01, 2011
 
Electronic Access: Free Full text (PDF file size is 991KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: 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.
 
Series: Working Paper No. 11/38
Subject(s): Aging | Cross country analysis | Economic growth | India | Labor productivity | Labor supply | Migration | Population

Author's Keyword(s): Demographic dividend | Indian states | age-structure | migration | convergence.
 
English
Publication Date: February 01, 2011
Format: Paper
Stock No: WPIEA2011038 Pages: 31
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org