The ongoing demographic change has been changing the age structure of populations in developing countries, with far-reaching implications for economic growth and productivity. This study engages with the ongoing debate concerning whether an ageing population affects labour productivity, which is also a significant concern in changing workforce dynamics.
This study employs the cross-sectionally dependent autoregressive distributive lag (CS-ARDL) estimator on a dataset of 79 developing countries from 1991 to 2019.
Unlike previous studies, the results of this study show that older workers (aged 55–64) are still productive in increasing aggregate productivity. However, the ageing population (population aged 65 and above) has an adverse effect on aggregate productivity.
This study looks into the issue of population ageing in determining aggregate productivity in the context of developing countries, which has been given lesser attention. The estimation technique chosen for this study tackles prominent challenges in panel data research, such as cross-sectional dependency, slope heterogeneity, structural breaks, heteroskedasticity and serial correlation. The results give developing nations policy insights to manage demographic shifts and lessen the productivity issues brought on by population ageing.
