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Implications of Population Aging for Economic Growth

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  • David E. Bloom
  • David Canning
  • Günther Fink

Abstract

The share of the population aged 60 and over is projected to increase in nearly every country in the world during 2005-2050. Population ageing will tend to lower both labor-force participation and savings rates, thereby raising concerns about a future slowing of economic growth. Our calculations suggest that OECD countries are likely to see modest – but not catastrophic – declines in the rate of economic growth. However, behavioral responses (including greater female labor force participation) and policy reforms (including an increase in the legal age of retirement) can mitigate the economic consequences of an older population. In most non-OECD countries, declining fertility rates will cause labor-force-to-population ratios to rise as the shrinking share of young people will more than offset the skewing of adults toward the older ages. These factors suggest that population ageing will not significantly impede the pace of economic growth in developing countries.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16705.

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Date of creation: Jan 2011
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Publication status: published as David E. Bloom & David Canning & Günther Fink, 2010. "Implications of population ageing for economic growth," Oxford Review of Economic Policy, Oxford University Press, vol. 26(4), pages 583-612, Winter.
Handle: RePEc:nbr:nberwo:16705

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  1. David Bloom & David Canning & Rick Mansfield & Michael Moore, 2006. "Demographic Change, Social Security Systems, and Savings," PGDA Working Papers, Program on the Global Demography of Aging 1906, Program on the Global Demography of Aging.
  2. James Poterba, 2004. "The Impact of Population Aging on Financial Markets," NBER Working Papers 10851, National Bureau of Economic Research, Inc.
  3. David E. Bloom & David Canning & Bryan Graham, 2003. "Longevity and Life-cycle Savings," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 105(3), pages 319-338, 09.
  4. Fogel, Robert W, 1994. "Economic Growth, Population Theory, and Physiology: The Bearing of Long-Term Processes on the Making of Economic Policy," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 369-95, June.
  5. David E. Bloom & David Canning & Jocelyn E. Finlay, 2008. "Demographic Change and Economic Growth in Asia," PGDA Working Papers, Program on the Global Demography of Aging 4108, Program on the Global Demography of Aging.
  6. 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.
  7. Andrew Mason & Ronald Lee & An-Chi Tung & Mun-Sim Lai & Tim Miller, 2006. "Population Aging and Intergenerational Transfers: Introducing Age into National Accounts," NBER Working Papers 12770, National Bureau of Economic Research, Inc.
  8. David E. Bloom & David Canning, 2004. "Global Demographic Change: Dimensions and Economic Significance," NBER Working Papers 10817, National Bureau of Economic Research, Inc.
  9. David Bloom & David Canning & Günther Fink & Jocelyn Finlay, 2009. "Fertility, female labor force participation, and the demographic dividend," Journal of Economic Growth, Springer, Springer, vol. 14(2), pages 79-101, June.
  10. Mariano Kulish & Kathryn Smith & Christopher Kent, 2006. "Ageing, Retirement and Savings: A General Equilibrium Analysis," RBA Research Discussion Papers, Reserve Bank of Australia rdp2006-06, Reserve Bank of Australia.
  11. 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, Elsevier, vol. 54(1), pages 115-117, January.
  12. David E. Bloom & Ajay Mahal & Larry Rosenberg & Jaypee Sevilla, 2010. "Economic security arrangements in the context of population ageing in India," PGDA Working Papers, Program on the Global Demography of Aging 6010, Program on the Global Demography of Aging.
  13. 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.
  14. Dora L. Costa, 1998. "The Evolution of Retirement: An American Economic History, 1880-1990," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number cost98-1.
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Citations

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Cited by:
  1. Klaus Prettner & Timo Trimborn, 2012. "Demographic Change and R&D-based Economic Growth: Reconciling Theory and Evidence," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c017_006, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. 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, Elsevier, vol. 22(C), pages 70-79.
  3. Bali, Azad Singh & Asher, Mukul G., 2012. "Coordinating Healthcare and Pension Policies: An Exploratory Study," ADBI Working Papers, Asian Development Bank Institute 374, Asian Development Bank Institute.
  4. Sasa Milivojevic & Dragan Filimonovic, 2012. "Ageing of Population and Demographic Consequences in Future Labour Market Trends," Book Chapters, Institute of Economic Sciences, Institute of Economic Sciences.
  5. Klaus Prettner & David Canning, 2012. "Increasing life expectancy and optimal retirement:does population aging necessarily undermine economic prosperity?," PGDA Working Papers, Program on the Global Demography of Aging 9112, Program on the Global Demography of Aging.
  6. Yunus Aksoy & Tobias Grasl & Ron P. Smith, 2012. "The Economic Impact of Demographic Structure in OECD Countries," CESifo Working Paper Series 3960, CESifo Group Munich.
  7. Attar, M. Aykut, 2013. "Growth and Demography in Turkey: Economic History vs. Pro-Natalist Rhetoric," MPRA Paper 47275, University Library of Munich, Germany.
  8. Bloom, David E. & Sousa-Poza, Alfonso, 2013. "Ageing and productivity," FZID Discussion Papers, University of Hohenheim, Center for Research on Innovation and Services (FZID) 63-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  9. 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., Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez 9, Cuerpo Académico 41 de la Universidad Autónoma de Ciudad Juárez, revised 09 Dec 2012.
  10. Kunze, Lars, 2014. "Life expectancy and economic growth," Journal of Macroeconomics, Elsevier, Elsevier, vol. 39(PA), pages 54-65.
  11. David E. Bloom & Axel Boersch-Supan & Patrick McGee & Atsushi Seike, 2011. "Population Aging: Facts, Challenges, and Responses," PGDA Working Papers, Program on the Global Demography of Aging 7111, Program on the Global Demography of Aging.
  12. Bloom, David E. & Sousa-Poza, Alfonso, 2013. "Ageing and Productivity: Introduction," IZA Discussion Papers 7205, Institute for the Study of Labor (IZA).
  13. Sau-Him Lau, 2013. "Does longevity improvement always raise the length of schooling through the longer-horizon mechanism?," 2013 Meeting Papers, Society for Economic Dynamics 292, Society for Economic Dynamics.
  14. repec:got:cegedp:139 is not listed on IDEAS
  15. 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, Universidade do Porto, Faculdade de Economia do Porto 504, Universidade do Porto, Faculdade de Economia do Porto.
  16. Bloom, David E. & McKinnon, Roddy, 2013. "The Design and Implementation of Public Pension Systems in Developing Countries: Issues and Options," IZA Policy Papers, Institute for the Study of Labor (IZA) 59, Institute for the Study of Labor (IZA).
  17. Patrick A. Imam, 2013. "Shock from Graying," IMF Working Papers, International Monetary Fund 13/191, International Monetary Fund.
  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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