The populations of most countries of the world are aging, prompting a deluge of news stories about slower economic growth, reduced labor force participation, looming pension crises, exploding health care costs and the reduced productivity and cognitive functioning of the elderly.
These stories are dire, in part because the most widely used measure of aging – the old-age dependency ratio, which measures the number of older dependents relative to working-age people – was developed a century ago and implies the consequences of aging will be much worse than they are likely to be. On top of that, this ratio is used in political and economic discussions of topics such as health care costs and the pension burden – things it was not designed to address.
Turning 65 in 2016 doesn’t mean the same thing as hitting 65 in 1916. So instead of relying on the old-age dependency ratio to figure out the impact of aging, we propose using a series of new measures that take changes in life expectancy, labor participation and health spending into account. When you take these new realities into account, the picture looks a lot brighter.
To get a better sense of what population aging really means today, we decided to develop a new set of measures that take these new realities into account to replace the old-age dependency ratio. And instead of one ratio, we created several ratios to evaluate health care costs, labor force participation and pensions.
Chosen excerpts by Job Market Monitor. Read the whole story at Why the impact of ageing may not be as bad as we think | World Economic Forum
Demographic aging and accompanying shrinking labor forces are common phenomena throughout the developed world. There is a widespread notion that societal aging will put significant pressure on public budgets, a view supported by recent OECD projections. Expenditures for public health are expected to rise, old-age pension systems already are burdened by an imbalance of working … Continue reading
Demographic change will have a profound effect on the UK labour market over the next two decades and beyond. Over 30% of people in employment in the UK are over the age of 50, and there are unlikely to be enough younger people entering the labour market to replace this group when they leave the … Continue reading
Population aging is often cited as a major economic challenge for the developed world. But a new report from the McKinsey Global Institute (MGI) shows that shifting demographics pose an even greater threat to the growth prospects of many emerging economies. Over the last 50 years, the world’s 1.6% annual population growth fueled a surging … Continue reading
Gillian B. White: You spent a lot of time researching the labor force and changing demographics around the world, in your opinion how prepared is the U.S. for the shift to an older population? Joseph M. Coleman: There are good things and bad things. We have a very dynamic economy, we’re able to react to … Continue reading
The entry of the massive baby boomer generation into the Canadian work force over the 1960s and 1970s resulted in rapid work force and economic growth, rising unemployment and increasing inflation. Their exit over the next 20 years will have the opposite effects: slow work force and economic growth, falling unemployment and reduced inflation (possibly … Continue reading
Japan is the world’s oldest country—25 percent of its people are aged 65 or over. By 2040, that ratio is estimated to rise to the historically unprecedented level of 36 percent. The population of Japan nearly tripled in the 20th century, peaking at 128 million in 2010. But with a falling birth rate, one of … Continue reading
Global economic growth is under threat because populations are aging, shrinking the size of the pool of people able to work. The only answer to the growth question in an era of dramatic demographic change is productivity growth. If historical rates of productivity growth were to remain constant, global GDP growth would be 40 percent … Continue reading