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Implications of Population Aging for Economic Growth

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  • David E. Bloom

    ()
    (Harvard School of Public Health)

  • David Canning

    ()
    (Harvard School of Public Health)

  • Günther Fink

    ()
    (Harvard School of Public Health)

Abstract

Between 2005 and 2050, the share of the population aged 60 and over is projected to increase in nearly every country in the world. Insofar as this shift will tend to lower both labor force participation and savings rates, it raises bona fide concerns about a future slowing of economic growth. These concerns apply to both developed and developing countries. An examination of past decades' data for OECD countries reveals that life expectancy has increased much faster than the legal age of retirement. Indications are similar in developing countries, which face the additional challenge of getting "old" before they get "rich". This paper analyses the implications of population aging for economic growth. Our main conclusion is that population aging poses challenges that are formidable, but not insurmountable.

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Bibliographic Info

Paper provided by Program on the Global Demography of Aging in its series PGDA Working Papers with number 6411.

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Date of creation: Jan 2011
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Handle: RePEc:gdm:wpaper:6411

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Web page: http://www.hsph.harvard.edu/pgda
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Keywords: population aging; economic growth; economic policy; labor force participation; life expectancy; retirement age;

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References

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  1. David E. Bloom & David Canning & Günther Fink & Jocelyn E. Finlay, 2007. "Fertility, Female Labor Force Participation, and the Demographic Dividend," NBER Working Papers 13583, National Bureau of Economic Research, Inc.
  2. Robert W. Fogel, 1994. "Economic Growth, Population Theory, and Physiology: The Bearing of Long-Term Processes on the Making of Economic Policy," NBER Working Papers 4638, National Bureau of Economic Research, Inc.
  3. Warwick J. McKibbin, 2005. "The Global Macroeconomic Consequences Of A Demographic Transition," CAMA Working Papers 2006-06, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  4. Mariano Kulish & Kathryn Smith & Christopher Kent, 2006. "Ageing, Retirement and Savings: A General Equilibrium Analysis," RBA Research Discussion Papers rdp2006-06, Reserve Bank of Australia.
  5. David E. BLOOM & Jocelyn E. FINLAY, 2009. "Demographic Change and Economic Growth in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 4(1), pages 45-64.
  6. James Poterba, 2004. "The Impact of Population Aging on Financial Markets," NBER Working Papers 10851, National Bureau of Economic Research, Inc.
  7. David E. Bloom & David Canning & Pia N. Malaney, 1999. "Demographic Change and Economic Growth in Asia," CID Working Papers 15, Center for International Development at Harvard University.
  8. David E. Bloom & David Canning & Bryan Graham, 2002. "Longevity and Life Cycle Savings," NBER Working Papers 8808, National Bureau of Economic Research, Inc.
  9. Andrew Mason & Ronald Lee & An-Chi Tung & Mun-Sim Lai & Tim Miller, 2009. "Population Aging and Intergenerational Transfers: Introducing Age into National Accounts," NBER Chapters, in: Developments in the Economics of Aging, pages 89-122 National Bureau of Economic Research, Inc.
  10. David E. Bloom & David Canning & Günther Fink & Jocelyn E. Finlay, 2009. "The Cost of Low Fertility in Europe," NBER Working Papers 14820, National Bureau of Economic Research, Inc.
  11. David Bloom & David Canning & Rick Mansfield & Michael Moore, 2006. "Demographic Change, Social Security Systems, and Savings," PGDA Working Papers 1906, Program on the Global Demography of Aging.
  12. David E. Bloom & David Canning, 2005. "Global Demographic Change: Dimensions and Economic Significance," PGDA Working Papers 0105, Program on the Global Demography of Aging.
  13. David E. Bloom & Ajay Mahal & Larry Rosenberg & Jaypee Sevilla, 2010. "Economic security arrangements in the context of population ageing in India," PGDA Working Papers 6010, Program on the Global Demography of Aging.
  14. Laitner, John, 2007. "Comment on: David Bloom, David Canning, Rick Mansfield, and Michael Moore's "Demographic change, social security systems, and savings"," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 115-117, January.
  15. Dora L. Costa, 1998. "The Evolution of Retirement: An American Economic History, 1880-1990," NBER Books, National Bureau of Economic Research, Inc, number cost98-1.
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Citations

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Cited by:
  1. Klaus Prettner & David Canning, 2012. "Increasing life expectancy and optimal retirement:does population aging necessarily undermine economic prosperity?," PGDA Working Papers 9112, Program on the Global Demography of Aging.
  2. Yunus Aksoy & Tobias Grasl & Ron P Smith, 2012. "The economic impact of demographic structure in OECD countries," Birkbeck Working Papers in Economics and Finance 1212, Birkbeck, Department of Economics, Mathematics & Statistics.
  3. Prettner, Klaus & Trimborn, Timo, 2012. "Demographic change and R&D-based economic growth: Reconciling theory and evidence," Center for European, Governance and Economic Development Research Discussion Papers 139, University of Goettingen, Department of Economics.
  4. Prettner, Klaus & Bloom, David E. & Strulik, Holger, 2013. "Declining fertility and economic well-being: Do education and health ride to the rescue?," Labour Economics, Elsevier, vol. 22(C), pages 70-79.
  5. Patrick A. Imam, 2013. "Shock from Graying," IMF Working Papers 13/191, International Monetary Fund.
  6. Sasa Milivojevic & Dragan Filimonovic, 2012. "Ageing of Population and Demographic Consequences in Future Labour Market Trends," Book Chapters, Institute of Economic Sciences.
  7. Bali, Azad Singh & Asher, Mukul G., 2012. "Coordinating Healthcare and Pension Policies: An Exploratory Study," ADBI Working Papers 374, Asian Development Bank Institute.
  8. Bloom, David E. & Sousa-Poza, Alfonso, 2013. "Ageing and Productivity: Introduction," IZA Discussion Papers 7205, Institute for the Study of Labor (IZA).
  9. Renuga Nagarajan & Aurora A.C. Teixeira & Sandra T. Silva, 2013. "The impact of an ageing population on economic growth: an exploratory review of the main mechanisms," FEP Working Papers 504, Universidade do Porto, Faculdade de Economia do Porto.
  10. Bloom, David E. & McKinnon, Roddy, 2013. "The Design and Implementation of Public Pension Systems in Developing Countries: Issues and Options," IZA Policy Papers 59, Institute for the Study of Labor (IZA).
  11. Attar, M. Aykut, 2013. "Growth and Demography in Turkey: Economic History vs. Pro-Natalist Rhetoric," MPRA Paper 47275, University Library of Munich, Germany.
  12. David E. Bloom & Axel Boersch-Supan & Patrick McGee & Atsushi Seike, 2011. "Population Aging: Facts, Challenges, and Responses," PGDA Working Papers 7111, Program on the Global Demography of Aging.
  13. David Vázquez Guzman, 2012. "A comparative study of well-being for elders in Mexico and England," Estudios Regionales en Economía, Población y Desarrollo. Cuadernos de trabajo de la Universidad Autónoma de Ciudad Juárez. 9, Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez, revised 09 Dec 2012.
  14. Bloom, David E. & Sousa-Poza, Alfonso, 2013. "Ageing and productivity," FZID Discussion Papers 63-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  15. Sau-Him Lau, 2013. "Does longevity improvement always raise the length of schooling through the longer-horizon mechanism?," 2013 Meeting Papers 292, Society for Economic Dynamics.
  16. Prettner, Klaus & Trimborn, Timo, 2012. "Demographic change and R&D-based economic growth: Reconciling theory and evidence," Center for European, Governance and Economic Development Research Discussion Papers 139, University of Goettingen, Department of Economics.
  17. Kunze, Lars, 2014. "Life expectancy and economic growth," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 54-65.
  18. Ernesto Friedrich de Lima Amaral & Joseph E. Potter & Daniel Hamermesh & Eduardo Rios-Neto, 2013. "Age, education, and earnings in the course of Brazilian development: Does composition matter?," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 28(20), pages 581-612, March.

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