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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, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:18400
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    File URL: https://cepr.org/publications/DP18400
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    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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