Population aging and economic dependency in Thailand: A multidimensional prospective analysis

Guillaume Marois , International Institute for Applied Systems Analysis (IIASA)
Stuart Gietel-Basten, The Hong Kong University of Science and Technology
Wiraporn Pothisiri, Chulalongkorn University

Thailand is experiencing rapid population aging due to declining fertility rates and increasing life expectancy. Traditional dependency ratios using age thresholds suggest a dramatic increase in the ratio of dependents to workers that threatens fiscal sustainability. This paper argues for a more nuanced perspective on population aging in Thailand using a microsimulation model incorporating multidimensional measures of dependency. While the total working-age population will decline, improvements in health and life expectancy mean the elderly dependent population is increasing less steeply. Productivity gains from higher educational attainment can largely offset the impact of fewer workers. Ongoing formalization of the Thai economy also increases average productivity as informal workers transition to more productive formal employment. Sophisticated dependency ratios accounting for these changes in worker productivity show the economic burden of dependents relative to workers remaining stable or even declining by 2070 despite population aging. Rather than focusing narrowly on promoting fertility, policy should priorities human capital improvements through education and facilitating formal economic opportunities.

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 Presented in Session 83. Economic Impacts of Population Change