Population aging—the increase of the share of older individuals in a society due to fertility declines and rising life expectancy—is an irreversible global trend with far-reaching economic and socio-political consequences. By 2050, the number of people aged 60 and older will more than double from its current levels, reaching around 2 billion. While Europe was the first global region to embark on a demographic transition, most of the expected growth in the number of older people by 2050 will come from developing countries. Population aging will likely lead to declining labor forces, lower fertility, and an increase in the age dependency ratio, the ratio of working-age to old-age individuals. To illustrate, while there were 10 workers for every person older than 64 in the world in 1970, the expected number in 2050 is only four; it will even be less than two in some European countries.
Aging populations pose a challenge to the fiscal and macroeconomic stability of many societies through increased government spending on pension, healthcare, and social benefits programs for the elderly. This may hurt economic growth and overall quality of life if governments need to divert public spending from education and infrastructure investment to finance programs for the elderly.
A Two-Part Solution Focused on Work
For monetary and non-monetary reasons, work is a pivotal element of one’s well-being. Recognizing this could be an essential part of the solution. Paid work contributes not only to material well-being but also to psychological well-being through social interactions and opportunities for personal and professional growth. And unpaid work, like volunteering, care work, and artistic work, can provide these same psychological benefits. Given these positive effects, encouraging and rewarding paid and unpaid work among the elderly could be a pivotal part of the solution to the aging-related fiscal and social challenges.
To enact such a strategy, policy-makers could consider: (i) a gradual retirement scheme allowing older individuals to lower their working hours yet remain in the workforce and pay taxes until a later age; and (ii) furnishing options for and rewarding volunteering, care, and artistic activities among older society members.
Chosen excerpts by Job Market Monitor. Read the whole story at Two solutions to the challenges of population aging | Brookings Institution
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