Population Aging and Economic Dynamics in Ukraine: Models of Endogenous Growth Theory and Empirical Estimates of Current Challenges

Among the global problems faced by different countries in the last decade, the article looks at population aging. In the context of assessing the impact of population aging on economic dynamics, the scientific novelty of research is to find a solution to this problem in the plane of conceptual ideas formulated in theoretical models of endogenous growth. The authors emphasize the necessity of a state policy aimed at supporting “active aging”, which will help to activate human capital and economic growth by increasing formal employment of people over 60 and reducing informal employment accordingly. Using the linear regression equations, the hypothesis that there is a positive effect of active aging on economic dynamics and productivity in Ukraine has been statistically confirmed and quantitative estimates of the impact of these factors have been obtained. The authors' calculations show that the positive effects of such policy, in particular, are possible with the increase in health care costs, which depend on the activity and mobility of the retirement age. Among the challenges, the authors tested the hypothesis of an increase in informal employment and the shadow economy in the absence of government policies aimed at addressing aging. The use of VAR modeling has made it possible to confirm the relationship between real GDP, informal employment and the size of the shadow sector of the Ukrainian economy. The impulse response functions and variance decomposition confirm the negative impact of the growth of informal employment and, accordingly, the shadow economy on the economic dynamics in Ukraine. The practical significance of this study is the application of its results in the development of measures of economic policy and strategy of socio-economic development of Ukraine. Keywords—population aging, endogenous growth theory, informal labor, regression analysis, VAR model, Ukraine