Contribution of Demographic Factors to Indonesia’s Economic Growth
Most empirical studies on the dynamics of Indonesia's economic growth predominantly adopt a Neoclassical framework. As the framework generally regards population growth as an impediment to economic growth, very few studies discuss the effect of demographic factors. Contributing to this limited...
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| Format: | Article |
| Language: | English |
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Muhammadiyah University Press
2024-12-01
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| Series: | Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan |
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| Online Access: | https://journals2.ums.ac.id/index.php/jep/article/view/8178 |
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| author | Alfa Farah F.X. Sugiyanto |
| author_facet | Alfa Farah F.X. Sugiyanto |
| author_sort | Alfa Farah |
| collection | DOAJ |
| description | Most empirical studies on the dynamics of Indonesia's economic growth predominantly adopt a Neoclassical framework. As the framework generally regards population growth as an impediment to economic growth, very few studies discuss the effect of demographic factors. Contributing to this limited literature, this study estimates the contribution of demographic factors to Indonesia’s economic growth. We employed a descriptive accounting framework to decompose the growth of GDP per capita into pure labor effect and productivity effect. The decomposition analysis shows that the contribution of demographic factors to GDP per capita growth generally declined during 1971–2020. From 1971 to 2000, the pure labor effect contributed more than the productivity effect. This was due to demographic transition and productivity enhancing labor reallocation. However, from 2000 to 2020, the pure labor effect's contribution fell below that of the productivity effect. The benefits of the growing dominance of working population been largely offset by reallocation of labor from high to low productivity sector and the decreasing rate in the labor force participation, leading to the decline in the relative contribution of pure labor effect. |
| format | Article |
| id | doaj-art-bc3b24449faf4599ae13f1c4c2c332fa |
| institution | Kabale University |
| issn | 1411-6081 2460-9331 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Muhammadiyah University Press |
| record_format | Article |
| series | Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan |
| spelling | doaj-art-bc3b24449faf4599ae13f1c4c2c332fa2025-08-20T03:33:38ZengMuhammadiyah University PressJurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan1411-60812460-93312024-12-0117118110.23917/jep.v25i2.238168210Contribution of Demographic Factors to Indonesia’s Economic GrowthAlfa Farah0F.X. Sugiyanto1Faculty of Economics and Business, Diponegoro UniversityFaculty of Economics and Business, Diponegoro UniversityMost empirical studies on the dynamics of Indonesia's economic growth predominantly adopt a Neoclassical framework. As the framework generally regards population growth as an impediment to economic growth, very few studies discuss the effect of demographic factors. Contributing to this limited literature, this study estimates the contribution of demographic factors to Indonesia’s economic growth. We employed a descriptive accounting framework to decompose the growth of GDP per capita into pure labor effect and productivity effect. The decomposition analysis shows that the contribution of demographic factors to GDP per capita growth generally declined during 1971–2020. From 1971 to 2000, the pure labor effect contributed more than the productivity effect. This was due to demographic transition and productivity enhancing labor reallocation. However, from 2000 to 2020, the pure labor effect's contribution fell below that of the productivity effect. The benefits of the growing dominance of working population been largely offset by reallocation of labor from high to low productivity sector and the decreasing rate in the labor force participation, leading to the decline in the relative contribution of pure labor effect.https://journals2.ums.ac.id/index.php/jep/article/view/8178demographic changelabor forceeconomic growth |
| spellingShingle | Alfa Farah F.X. Sugiyanto Contribution of Demographic Factors to Indonesia’s Economic Growth Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan demographic change labor force economic growth |
| title | Contribution of Demographic Factors to Indonesia’s Economic Growth |
| title_full | Contribution of Demographic Factors to Indonesia’s Economic Growth |
| title_fullStr | Contribution of Demographic Factors to Indonesia’s Economic Growth |
| title_full_unstemmed | Contribution of Demographic Factors to Indonesia’s Economic Growth |
| title_short | Contribution of Demographic Factors to Indonesia’s Economic Growth |
| title_sort | contribution of demographic factors to indonesia s economic growth |
| topic | demographic change labor force economic growth |
| url | https://journals2.ums.ac.id/index.php/jep/article/view/8178 |
| work_keys_str_mv | AT alfafarah contributionofdemographicfactorstoindonesiaseconomicgrowth AT fxsugiyanto contributionofdemographicfactorstoindonesiaseconomicgrowth |