DEMOGRAPHIC DIVIDEND IN INDONESIA

Rajagukguk, Wilson (2016) DEMOGRAPHIC DIVIDEND IN INDONESIA. In: Proceeding International Conference on Nusantara Studies. Universitas Indonesia, Indonesia, Jakarta.

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Abstract

The impact of population on the economy, called the demographic dividend, is an increase in the share of population in the economic growth. The demographic dividend is the accelerated economic growth that may result from a decline in a country's mortality and fertility and the subsequent change in the age structure of the population (Gribble and Bremner 2012). World Bank (2016) classified Indonesia as early-demographic dividend countries. Samosir (2015) proposed that in Indonesia, the window of opportunity to reap the first demographic dividend in Indonesia occurred since the 1970s when fertility started declining. A measure of demographic dividend is the dependency ratio. The demographic dividend is the increase of the share of population in the economy. The analysis employed a non-linear method. The predictor is the gross domestic product (GDP) Current Price. The covariates are investment and population (employment opportunity). The data come from the Indonesia’s National Account in 1970-2015. Using the Cobb-Douglas (CD) model it was found that the share of population on the economy in Indonesia as a whole is 21.2442% and the share of employment opportunity is 23.0863%. Demographic dividend is the difference in these shares in the econometric model. Using a generalized Cobb-Douglass (GDC) model, after dividing the data into two time spans, it was found the acceleration of population share on the economy (demographic dividend through the whole population) amounted to 1.1527% and the acceleration of employment opportunity amounted to 1.8874% (demographic dividend through employment opportunity).

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