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Age Structure and Trade Openness: An Empirical Investigation

by Yukio Fukumoto and Tomoko Kinugasa

East-West Center Working Papers: Environment, Population, and Health Series, No. 7

Publisher: Honolulu: East-West Center
Publication Date: June 2015
Binding: paper
Pages: 48
Free Download: PDF

 

This research focuses attention on the relationship between age structure and trade openness. We hypothesized that a higher working-age population share of a total population raises trade openness because dependent population tend to spend more than working-age population for non-tradable goods such as education and medical services. We estimated the effects of age structure on trade openness empirically using panel data of 85 countries from 1991 to 2010, and we simulated trade openness based on changes in age structure from 1991 to 2100. The estimation results show that an increase in the share of working-age (dependent) population in a total population has a positive (negative) effect on trade openness. According to the simulation results, an increase in the share of the working-age population will increase trade openness until the beginning of the 21st century. However, the turnover of the share of the working-age population and more rapid increase in the share of the old-dependent population will decrease trade openness after that.