The effect of population aging on aggregate labor supply in the United States

Output growth is determined by growth in labor productivity and growth in labor input. Over the past two decades, technological developments have changed how many economists think about growth in labor productivity. However, in the coming decades, the aging of the population will change how economists think about the growth in labor input in the United States. As the oldest baby boomers born in 1946 turned 50, then 55, and then 60, an important economic change has slowly surfaced: these people have become less likely to participate in the labor force. While this shift was obscured by a labor market slump in 2002, the aging of the American population began to put downward pressure on aggregate labor supply, marking the start of what is likely to be a sharp deceleration in labor input that will last another half-century.