Demographic Change and Economic Growth in India

Neha Jain, Jawaharlal Nehru University
Srinivas Goli, International Institute for Population Sciences (IIPS)
Arjun Jana, International Institute for Population Sciences (IIPS)

We have estimated India’s demographic dividend by human capital approach and macro-economic regression models considering a longer and more appropriate time frame compared to previous studies and also modelled interactions analyses. Our analysis highlights three key points. First, the demographic dividend is estimated to be about 1.9 percentage points per annum for the period 1981–2021 after controlling for core policy variables. Second, the favourable economic impact of demographic transition strengthens after 2011 but withered away in 2020-21 due to the Covid-19 pandemic. Third, the results based on model interactions support the argument that the realisation of the demographic dividend is conditional on a conducive policy environment with enabling aspects such as good healthcare, decent employment opportunities, and gender empowerment. The robustness of the main findings is verified by correcting for endogeneity using Instrumental Variable Regression model and comparing our estimates based on Conditional Barro Regression Model with previous studies.

Keywords: Human Capital, Education, and Work, Econometrics , Population and Development, Population Policies

See paper.