Population Aging: Economic Burden or Innovation Opportunity? Evidence from Japan and the G7

Population aging is one of the main challenges that developed countries are facing and it raises concerns about increasing fiscal pressure and healthcare expenditure. Japan represents an important case study of this phenomenon. This thesis aims to go beyond the negative side of population aging by highlighting its potential opportunities for innovation and economic development and to understand whether population aging may be positively associated with innovation in the AgeTech sector. The empirical analysis is made up of a balanced panel dataset of the G7 countries over the period 1981–2022. Innovation is measured through patent applications in the ICT, MedTech, and AI sectors as proxies. Population aging is measured as the share of total population aged 65 and above. Given the presence of heteroskedasticity and autocorrelation, the analysis uses a Fixed Effects model with Driscoll-Kraay standard errors. The results show a positive and statistically significant association as the coefficients of the population aged 65 and above are highly significant in all the models. This suggests that population aging represents a challenge for the future but may also represent an opportunity for innovation.