Economy & Business, Volume 11, 2017

Abstract: This paper analyzes and compares socio-economic consequences of demographic change in Pakistan and Japan. Using data from 1950-2050, our comparison shows that speed of demographic transition is much faster in Japan while Pakistan is experiencing a much favorable age structure and other demographic ratios, which provide a window of demographic dividend in future. Moreover, Shapley’s GDP breakdown approach is used to help us understand how marginal changes in labor productivity, effective employment and age structure are transformed into per capita GDP growth for both the countries. Our results show that despite larger increase in population, all three factors, i.e. labor productivity, effective employment and age structure have contributed positively towards per capita GDP growth in Pakistan. While in the case of Japan, a decline in the share of working age population (WAP) has contributed negatively towards per capita GDP growth, which is compensated by a remarkable growth in labor productivity.