The Effects of Changes in Population Age Structure on Per Capita Income in Iran Considering Effective Channels

On the factors affecting economic growth and per-capita income, the less attention has been paid to “population age structure”. We aim to investigate the effect of changes in population age structure on per capita income in Iran. To do this, we identify the most important effective channels according to review of literature. Then we design an empirical model that indicates the relationship between population age structure and per-capita income based on the neoclassical growth literature. In the next step we estimate and test the model in three specifications by Auto-Regressive Distributed Lags (ARDL) method during 1968-2010. The results indicate that the per capita income elasticity of labor supply (as the direct effectiveness channel of changes in population age structure on per capita income) is positive. In addition, indirect channels (which include savings, human capital and government spending) indicate that the per capita income elasticity with respect to an increase in share of population between the ages 15 to 64 is positive, and per capita income elasticity with respect to an increase in share of population below age 15 and above age 65 is negative.