Population Aging and the Three Demographic Dividends in Asia

The present study first examines the trends in age structural shifts in selectedAsian economies over the period 1950–2050 and analyzes their impact oneconomic growth in terms of the first and second demographic dividendscomputed from the system of National Transfer Accounts. Then, using theNational Transfer Accounts, we analyze the effect of the age structural shiftson the pattern of intergenerational transfers in Japan; the Republic of Korea;and Taipei,China. A brief comparison of the results reveals that, in thenext few decades, the latter two are likely to follow in Japan’s footsteps byincreasing public transfers and asset reallocations, and by reducing familialtransfers, particularly among older persons. Next, we consider a newly defineddemographic dividend, which is generated through the use of the untapped workcapacity of healthy older persons and to which we refer as “the silver” or “thethird” demographic dividend. By drawing upon microlevel datasets obtainedfrom Japan and Malaysia, we calculate the magnitude of the impact of thatdividend on macroeconomic growth in each of the two economies, concludingthat while in Japan the expected effect is substantial, in Malaysia it will takeseveral decades before the country can enjoy comparable benefits