Abstract
Businesspeople and politicians seem to be afraid that population reduction will be accompanied by economic recession. In this paper, we examine the experience of some countries of various sizes in which the population has been declining and observe how GDP, GDP per capita, unemployment rate, and labour force participation rate are evolving during the period that the population is declining. Using the pooled mean group (PMG) estimation method, we find that population decline can go hand in hand with growing GDP and increasing per capita GDP, and at the same time the labour participation rate may increase and unemployment may fall.
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