Population aging is widely assumed to have detrimental effects on economic growth yet there is little empirical evidence about the magnitude of its effects.
This paper starts from the observation that many U.S. states have already experienced substantial growth in the size of their older population and much of this growth was predetermined by historical trends in fertility.
We use predicted variation in the rate of population aging across U.S. states over the period 1980–2010 to estimate the economic impact of aging on state output per capita.
We find that a 10% increase in the fraction of the population ages 60+ decreases the growth rate of GDP per capita by 5.5%. Two-thirds of the reduction is due to slower growth in the labor productivity of workers across the age distribution, while one-third arises from slower labor force growth. Our results imply annual GDP growth will slow by 1.2 percentage points this decade and 0.6 percentage points next decade due to population aging.
Chosen excerpts by Job Market Monitor. Read the whole story at The Effect of Population Aging on Economic Growth, the Labor Force and Productivity | RAND
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 … Continue reading
Aging Finland – 34,000 immigrants needed instead of the current 18,000 in order to stop the decrease working-age population
Finland does not apply quotas or a points-based system to labour migration. Instead, Finland applies the determination of the availability of labour when issuing a residence permit for an employed person. However, the proportion of labour subject to the determination of the availability of labour is relatively low and the majority of labour uses other … Continue reading
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 … Continue reading
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
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
Self-employment in Canada – Aging and the shift of employment to older age groups led to an increase in the aggregate self-employment rate
Canada has a large group of unincorporated self-employed businesses that play a critical role in the early lifecycle of firms. This study presents summary statistics on the importance of a particular group of the self-employed: those whose primary source of income from employment comes from an unincorporated business. The unincorporated self-employed measured in this study … 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 euro zone’s number one economy will need an army of immigrants to keep its economy going, a Bertelsmann study showed on Friday. Europe’s powerhouse needs some 500,000 immigrants each year in order to stabilize its labor force and social welfare system until 2050, the newest study from think-tank Bertelsmann showed on Friday. The study … 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