Effects of Population Ageing on Human Capital Expenditures in the Context of Developed and Developing Economies: Balancing Health and Education Expenditures

Effects of Population Ageing on Human Capital Expenditures in the Context of Developed and Developing Economies: Balancing Health and Education Expenditures | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Effects of Population Ageing on Human Capital Expenditures in the Context of Developed and Developing Economies: Balancing Health and Education Expenditures Chamini Thilanka Hapu Rathnayaka Athukoralalage This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7399432/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Population ageing has emerged as a pressing policy concern in the 21st century amid resource constraints and contextual differences. Given the importance of human capital development, limited resource allocation for health and education sectors has been vastly discussed in academic discourses, yet leaving gaps for further exploration. This study examines the direct effects of population ageing on human capital expenditures (health and education) and the balancing effects between these expenditures posed by the ageing in developed and developing countries. Dynamic panel data methods are employed in the empirical analysis for 88 countries with data spanning from 2000 to 2023. The empirical results present unique effects of population ageing on human capital expenditures with contextual differences. In developed countries, population ageing emerges as a significant factor in increasing health expenditure, while it does not affect education expenditure significantly. Notably, the significant balancing effects between health expenditure and education expenditure due to ageing indicate that more spendings on the health sector reinforce education budgets through fiscal synergies. Governments in these ageing societies leverage health spending as a complementary cornerstone of human capital development, potentially expanding their fiscal capacity. In contrast, the direct and balancing effects of ageing remain insignificant in developing countries, indicating a lack of responsiveness in fiscal priorities to ageing due to the inherent circumstances of these economies. The comprehensive analysis of this study highlights the urgency of context-specific policy strategies for effective resource allocations to sustain human capital in the face of an unprecedented demographic change. JEL codes: H51, H52, J14, J18, J24 population ageing health expenditure education expenditure human capital balancing effects fiscal policy Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-7399432","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":522448618,"identity":"088dbed5-d0f3-4c85-8e8f-745e96cc84ef","order_by":0,"name":"Chamini Thilanka Hapu Rathnayaka Athukoralalage","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA6ElEQVRIiWNgGAWjYBACAyBmZjCwYGDgYWB8AOTw8BGhhbGZwUACpIUZpJ+HjTgtDGAtbBIgEYJazKUPP39cUCAhb85z+Fnl1xw7GTYG5oePbuDRYtmXZtg8w0DCcGdvm9lt2W3JQIexGRvn4HPYGQbDZh4DCcYN5xnMbktuYwZq4WGTxq+F/SNIi/2G8+zfiiW31ROjhQdsS+KGsz1mjB+3HSZKS+FsoJbkDWfOFEszbjvOw8ZM0C/sGz7z/LGx3XAmfePHn9uq7fnZmx8+xqcFBTDzgElilYMA4w9SVI+CUTAKRsGIAQDRVUJUzuDaZwAAAABJRU5ErkJggg==","orcid":"","institution":"University of Helsinki","correspondingAuthor":true,"prefix":"","firstName":"Chamini","middleName":"Thilanka Hapu Rathnayaka","lastName":"Athukoralalage","suffix":""}],"badges":[],"createdAt":"2025-08-18 11:53:23","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-7399432/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-7399432/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":92456167,"identity":"bb898da6-1b1d-49f0-9c77-b44ef085bd65","added_by":"auto","created_at":"2025-09-30 02:17:19","extension":"docx","order_by":0,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":89892,"visible":true,"origin":"","legend":"","description":"","filename":"RevisedAnonymisedmanuscriptEffectsofPopulationAgingonHumanCapitalExpenditures.docx","url":"https://assets-eu.researchsquare.com/files/rs-7399432/v1/1f6e541cc9a3b454d96563bc.docx"},{"id":92456166,"identity":"34938c1d-d0cf-4433-94ed-69e4c2dbfab7","added_by":"auto","created_at":"2025-09-30 02:17:19","extension":"json","order_by":1,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":4016,"visible":true,"origin":"","legend":"","description":"","filename":"95a7585fe78c407b98ed1475b35f9452.json","url":"https://assets-eu.researchsquare.com/files/rs-7399432/v1/0bbb05a47c1ce25732fe38b4.json"},{"id":92456540,"identity":"c891ddf3-1220-4bc9-b6fc-c67931e7f6b5","added_by":"auto","created_at":"2025-09-30 02:25:19","extension":"xml","order_by":2,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":123001,"visible":true,"origin":"","legend":"","description":"","filename":"95a7585fe78c407b98ed1475b35f94521enriched.xml","url":"https://assets-eu.researchsquare.com/files/rs-7399432/v1/7a001b79f8668fd41433d377.xml"},{"id":92456169,"identity":"1eb666a8-0934-4f25-b921-e4ca5812af64","added_by":"auto","created_at":"2025-09-30 02:17:20","extension":"xml","order_by":3,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":123185,"visible":true,"origin":"","legend":"","description":"","filename":"95a7585fe78c407b98ed1475b35f94521structuring.xml","url":"https://assets-eu.researchsquare.com/files/rs-7399432/v1/b58cd1c84880d6dfc0485718.xml"},{"id":92456170,"identity":"eaeb7833-9695-46d5-ac2f-83fefd613082","added_by":"auto","created_at":"2025-09-30 02:17:20","extension":"html","order_by":4,"title":"","display":"","copyAsset":false,"role":"acdc-reference","size":131493,"visible":true,"origin":"","legend":"","description":"","filename":"earlyproof.html","url":"https://assets-eu.researchsquare.com/files/rs-7399432/v1/e2f053c77689e9117aacc0e3.html"},{"id":98314110,"identity":"37ac87ff-a37e-477a-bbaa-5270bf80f5ad","added_by":"auto","created_at":"2025-12-16 12:55:37","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":546675,"visible":true,"origin":"","legend":"","description":"","filename":"RevisedAnonymisedmanuscriptEffectsofPopulationAgingonHumanCapitalExpenditures.pdf","url":"https://assets-eu.researchsquare.com/files/rs-7399432/v1_covered_3ff34370-76be-4abb-9276-9c5c2ddad059.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Effects of Population Ageing on Human Capital Expenditures in the Context of Developed and Developing Economies: Balancing Health and Education Expenditures","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":true,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"population ageing, health expenditure, education expenditure, human capital, balancing effects, fiscal policy","lastPublishedDoi":"10.21203/rs.3.rs-7399432/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-7399432/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003ePopulation ageing has emerged as a pressing policy concern in the 21st century amid resource constraints and contextual differences. Given the importance of human capital development, limited resource allocation for health and education sectors has been vastly discussed in academic discourses, yet leaving gaps for further exploration. This study examines the direct effects of population ageing on human capital expenditures (health and education) and the balancing effects between these expenditures posed by the ageing in developed and developing countries. Dynamic panel data methods are employed in the empirical analysis for 88 countries with data spanning from 2000 to 2023. The empirical results present unique effects of population ageing on human capital expenditures with contextual differences. In developed countries, population ageing emerges as a significant factor in increasing health expenditure, while it does not affect education expenditure significantly. Notably, the significant balancing effects between health expenditure and education expenditure due to ageing indicate that more spendings on the health sector reinforce education budgets through fiscal synergies. Governments in these ageing societies leverage health spending as a complementary cornerstone of human capital development, potentially expanding their fiscal capacity. In contrast, the direct and balancing effects of ageing remain insignificant in developing countries, indicating a lack of responsiveness in fiscal priorities to ageing due to the inherent circumstances of these economies. The comprehensive analysis of this study highlights the urgency of context-specific policy strategies for effective resource allocations to sustain human capital in the face of an unprecedented demographic change.\u003c/p\u003e\n\u003cp\u003eJEL codes: H51, H52, J14, J18, J24\u003c/p\u003e","manuscriptTitle":"Effects of Population Ageing on Human Capital Expenditures in the Context of Developed and Developing Economies: Balancing Health and Education Expenditures","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-09-30 02:17:15","doi":"10.21203/rs.3.rs-7399432/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"bfa51d88-3501-4550-9cf0-897c92f330d5","owner":[],"postedDate":"September 30th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[],"tags":[],"updatedAt":"2025-12-16T12:54:03+00:00","versionOfRecord":[],"versionCreatedAt":"2025-09-30 02:17:15","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-7399432","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-7399432","identity":"rs-7399432","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}