The Korean Journal of Economic Studies
The Effects of Aging and Income Inequality on Economic Growth
Keun Yeong Lee (Sungkyunkwan University)Year 2019Vol. 67No. 2
The paper analyzes how aging and income inequality have affected economicgrowth over the last 50 years using annual data such as the ratio of elderlypeople 65 years old or older, the EHII Gini coefficient, and the real GDP percapita. According to the empirical analysis, the economic growth ratedecreases as the aging and income inequality increase over the entire period.However, the results of the Qu and Perron (2007) test show that incomeinequality has a different effect on economic growth depending on the period,when dividing the entire period into three periods. Further empirical analysisusing time-varying VAR models also shows that the median response ofeconomic growth to positive shock of income inequality is in the form of U orW, not in the form of an inverse U. On the other hand, the negative responseof economic growth to the aging shock is constant irrespective of the period.