ABSTRACT
In India, the recent fall in fertility rates and increases in life expectancy combined with the past changing patterns of birth and death rates have been producing a noteworthy shift in the population age structure. Particularly, the share of working-age population in the total population has been increasing with the growing evidence that they are healthier than before. This has implications for earnings, employment, and savings thereby indicating maximization of the demographic dividend of the nation subject to the availability of harmonious policy environments. In this context, this paper examines the dynamic nexus between the growth rate of total population and economic growth, and also investigates the relationship between the growth rate of the share of the working-age population and economic growth in India during 1961 to 2015 using Toda-Yamamoto noncausality approach. The results provide the evidence of the feedback causality between the former, and unidirectional causality between the latter in favor of economic growth. This finding, on the one hand, implies that population growth in India is both the cause and consequence of economic growth, and on the other hand, implies that growth of the share of working-age population has positive impacts on the economic growth of the country. It is, therefore, essential to have complementary policies and facilitating institutions to capitalize this window of opportunity in the country to boost the macroeconomic performance.
