Demography and International Trade
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| Title | Demography and International Trade
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| Author | Yao Yang, Tian Wei, Yu Miaojie and Zhou Yi |
| Organization | CCER; GSM; University of California, Berkeley; CCER |
| Email | yyao@ccer.edu.cn,wei.tian08@gmail.com,yizhou.ccer@gmail.com,mjyu@ccer.edu.cn |
| Key Words | International trade; Working-age Ratio; Gravity Equation |
| Abstract | Does demographic structure affect trade? On the one hand, a high working-age ratio in the exporting country can generate more output and hence lead to more export. On the other hand, a high working-age ratio in the importing country implies higher labor income and hence leads to more import. In this paper, we analyze the effect of demographic structure on trade by augmenting the gravity equation with the working-age ratio. Using a large panel dataset of 176 countries for the period 1970-2006 and controlling for multilateral resistance, we find empirical evidence consistent with our theoretical predictions. The finding is robust to different econometric methods and different specifications. A comparison between China and India shows that China’s export would decline by 30% and India’s export would increase by 30% if the two countries switched their working-age ratios. |
| Serial Number | WP329 |
| Time | 2012-08-29 |
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