Age and education effects in Singapore’s demographic dividend 1970–2020

Abstract

Singapore had experienced rapid GDP growth from the period of 1970-2020. This work is adds to the overall contribution in studies understanding the contribution of age and education effects in the demographic dividend for countries, in this case – for a small, rapidly-developing country in Asia that had achieved high-income status. Following Rentería et. al. (2016), we use the Das Gupta decomposition technique to decompose Singapore’s demographic dividend to the respective age effect and education effect. We do this, having derived labour income and consumption profiles by age and education attainment, using National Transfer Account (NTA) methodology. We find that for Singapore the education effect was larger than the age effect for the entire period, driven by the education effect on labour income. These findings are comparable to Rentería et. al. (2016) for Mexico and Spain where the education effect were also larger than the age effect. Understanding the contributions of age and education effects on the economic support ratio will have policy implications as Singapore continues to age rapidly. This work also adds to the perspective on the importance of building up human capital in sustaining the demographic dividend.