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Population Aging and Economic Growth: From Demographic Dividend to Demographic Drag?

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  • Kotschy, Rainer
  • Bloom, David

Abstract

This paper examines the extent to which changes in working-age shares associated with population aging might slow economic growth in upcoming years. We first analyze the economic effects of changing working-age shares in a standard empirical growth model using country panel data from 1950–2015. We then juxtapose the estimates with predicted shifts in population age structure to project economic growth in 2020–2050. Our results indicate that population aging will slow economic growth throughout much of the world. Expansions of labor supply due to improvements in functional capacity among older people can cushion much of this demographic drag.

Suggested Citation

  • Kotschy, Rainer & Bloom, David, 2023. "Population Aging and Economic Growth: From Demographic Dividend to Demographic Drag?," CEPR Discussion Papers 18400, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18400
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    2. Samantha Ajovalasit & Andrea Consiglio & Davide Provenzano, 2024. "Debt Sustainability in the Context of Population Ageing: A Risk Management Approach," Risks, MDPI, vol. 12(12), pages 1-23, November.
    3. Fernández-Villaverde, Jesús & Ventura, Gustavo & Yao, Wen, 2025. "The wealth of working nations," European Economic Review, Elsevier, vol. 173(C).
    4. Scherbov, Sergei & Sanderson, Warren C., 2025. "Aging and age selectivity: Exploring differences across time and space," The Journal of the Economics of Ageing, Elsevier, vol. 31(C).
    5. Chen, Shiyi & Li, Yunpeng & Sun, Qinzhu, 2025. "Population aging and innovation slowdown: Dual mechanisms of firm cost structure and consumption preference," Economic Modelling, Elsevier, vol. 150(C).
    6. Kotschy, Rainer & Bloom, David E. & Scott, Andrew, 2024. "On the Limits of Chronological Age," IZA Discussion Papers 17427, Institute of Labor Economics (IZA).
    7. Natalia A. Ekimova, 2025. "Modeling Demographic Growth in Russia: Factors, Mechanisms, Reserves," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 24(2), pages 386-414.
    8. Zuzanna Kowalik & Piotr Lewandowski & Tomasz Geodecki & Maciej Grodzicki, 2023. "Automation In Shared Service Centres: Implications For Skills And Autonomy In A Global Organisation," IBS Working Papers 08/2023, Instytut Badan Strukturalnych.
    9. Banda, Mutisunge Allan, 2024. "Population age structure as a determinant of long-run macroeconomic growth: demographic endogenous growth theory," MPRA Paper 122725, University Library of Munich, Germany.
    10. Paweł Chrostek & Krzysztof Karbownik & Michał Myck, 2024. "Labor Market Externalities of Pre-retirement Employment Protection," NBER Working Papers 32371, National Bureau of Economic Research, Inc.
    11. Justin-Damien Guénette & Lin Shao, 2025. "Assessing the Impact of Demographic Composition on Productivity," Discussion Papers 2025-03, Bank of Canada.
    12. Eichengreen, Barry, 2024. "China's slowdown," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 46(1), pages 1-19.
    13. Madsen, Jakob B., 2025. "The aging society: Is growth reverting to pre-industrial levels in the 21st century?," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).
    14. Steven Brakman & Tristan Kohl & Charles van Marrewijk, 2025. "DemoGravity: World Population and Trade in the 21st Century," Review of International Economics, Wiley Blackwell, vol. 33(2), pages 486-501, May.
    15. Aurelien Eyquem & Masahige Hamano, 2022. "Aging, Fertility and Macroeconomic Dynamics," Working Papers 2121, Waseda University, Faculty of Political Science and Economics.
    16. Rainer Kotschy & David E. Bloom & Andrew J. Scott & Rainer Franz Kotschy, 2024. "On the Limits of Chronological Age," CESifo Working Paper Series 11451, CESifo.
    17. World Bank, 2024. "Productive Longevity," World Bank Publications - Reports 42559, The World Bank Group.
    18. Karolina Józefowicz, 2025. "Population Aging and Economic Competitiveness in Polish Small Towns," Sustainability, MDPI, vol. 17(10), pages 1-18, May.

    More about this item

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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