Effect of Life Expectancy on Economy Growth for High-Income Nations

The global age distribution has undergone substantial changes in recent years due to a rise in life expectancy. Based on projections, the global population of those aged 60 and beyond is expected to reach 2 billion by 2050, representing almost 25% of the total population. By the year 2050, it is expected that the proportion of adults aged 80 years and older will rise by 1% to 4% of the global population. Because of this trend, economic growth may be hampered. The growing reliance on elderly people results in an increase in taxation, while political pressures may cause public funding to be redirected to adult social care. If this option is made, it could be detrimental to both growth and investment. The present study uses panel data from high-income countries to determine if life expectancy is a favorable predictor of economic growth using Granger causality and panel regression. The Hausman test was used to evaluate pooled, random, and fixed effect models in order to determine which model was the most appropriate. Based on the results, the fixed effect model tends to perform better, as indicated by the p-value being less than 0.05. Furthermore, the findings convey that life expectancy has a negative impact on economic growth.