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Implications of Population Aging for Economic Growth

Author

Listed:
  • David E. Bloom

    () (Harvard School of Public Health)

  • David Canning

    () (Harvard School of Public Health)

  • Günther Fink

    () (Harvard School of Public Health)

Abstract

Between 2005 and 2050, the share of the population aged 60 and over is projected to increase in nearly every country in the world. Insofar as this shift will tend to lower both labor force participation and savings rates, it raises bona fide concerns about a future slowing of economic growth. These concerns apply to both developed and developing countries. An examination of past decades' data for OECD countries reveals that life expectancy has increased much faster than the legal age of retirement. Indications are similar in developing countries, which face the additional challenge of getting "old" before they get "rich". This paper analyses the implications of population aging for economic growth. Our main conclusion is that population aging poses challenges that are formidable, but not insurmountable.

Suggested Citation

  • David E. Bloom & David Canning & Günther Fink, 2011. "Implications of Population Aging for Economic Growth," PGDA Working Papers 6411, Program on the Global Demography of Aging.
  • Handle: RePEc:gdm:wpaper:6411
    as

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    File URL: http://www.hsph.harvard.edu/pgda/WorkingPapers/2011/PGDA_WP_64.pdf
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    References listed on IDEAS

    as
    1. David E. BLOOM & Jocelyn E. FINLAY, 2009. "Demographic Change and Economic Growth in Asia," Asian Economic Policy Review, Japan Center for Economic Research, vol. 4(1), pages 45-64.
    2. Kulish Mariano & Kent Christopher & Smith Kathryn, 2010. "Aging, Retirement, and Savings: A General Equilibrium Analysis," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-32, July.
    3. Gene M. Grossman (ed.), 1996. "Economic Growth," Books, Edward Elgar Publishing, volume 0, number 553.
    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. Warwick J. McKibbin, 2006. "The Global Macroeconomic Consequences of a Demographic Transition," Asian Economic Papers, MIT Press, vol. 5(1), pages 92-134, Winter.
    6. 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.
    7. 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, September.
    8. 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, vol. 84(3), pages 369-395, June.
    9. 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.
    10. David Bloom & David Canning & Günther Fink & Jocelyn Finlay, 2009. "Fertility, female labor force participation, and the demographic dividend," Journal of Economic Growth, Springer, vol. 14(2), pages 79-101, June.
    11. 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.
    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 6010, Program on the Global Demography of Aging.
    13. 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.
    14. 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.
    15. 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.
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    More about this item

    Keywords

    population aging; economic growth; economic policy; labor force participation; life expectancy; retirement age;

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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