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Implications of population ageing for economic growth

  • David E. Bloom
  • David Canning
  • Günther Fink

The share of the population aged 60 and over is projected to increase in nearly every country in the world during the period 2005--50. Population ageing will tend to lower both labour-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, behavioural responses (including greater female labour-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 labour-force-to-population ratios to rise as the shrinking share of young people will more than offset the skewing of adults towards the older ages. These factors suggest that population ageing will not significantly impede the pace of economic growth in developing countries. Copyright 2010, Oxford University Press.

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Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

Volume (Year): 26 (2010)
Issue (Month): 4 (Winter)
Pages: 583-612

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Handle: RePEc:oup:oxford:v:26:y:2010:i:4:p:583-612
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  1. 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.
  2. 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.
  3. Warwick J. McKibbin, 2006. "The Global Macroeconomic Consequences of a Demographic Transition," Asian Economic Papers, MIT Press, vol. 5(1), pages 92-134, January.
  4. David E. Bloom & David Canning, 2004. "Global demographic change : dimensions and economic significance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 9-56.
  5. 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.
  6. David E. Bloom & David Canning & Jocelyn E. Finlay, 2008. "Demographic Change and Economic Growth in Asia," PGDA Working Papers 4108, Program on the Global Demography of Aging.
  7. David E. Bloom & David Canning & Guenther Fink & Jocelyn E. Finlay, 2007. "Fertility, Female Labor Force Participation, and the Demographic Dividend," PGDA Working Papers 2507, Program on the Global Demography of Aging.
  8. Bloom, David E. & Canning, David & Mansfield, Richard K. & Moore, Michael, 2007. "Demographic change, social security systems, and savings," Journal of Monetary Economics, Elsevier, vol. 54(1), pages 92-114, January.
  9. 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.
  10. David E. Bloom & David Canning & Bryan Graham, 2003. "Longevity and Life-cycle Savings," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 319-338, 09.
  11. 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.
  12. 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.
  13. 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, August.
  14. James M. Poterba, 2004. "The impact of population aging on financial markets," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 163-216.
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