Some Macroeconomic Aspects of Global Population Aging
31 Pages Posted: 9 Jan 2010
Date Written: January 6, 2010
Abstract
Across the demographic transition, declining mortality followed by declining fertility produces decades of rising support ratios as child dependency falls. These improving support ratios raise per capita consumption, other things equal, but eventually deteriorate as the population ages. Population aging and the forces leading to it can produce not only frightening declines in support ratios, but also very substantial increases in productivity and per capita income by raising investment in physical and human capital. Longer life, lower fertility, and population aging all raise the demand for wealth needed to provide for old age consumption. This leads to increased capital per worker even as aggregate saving rates fall. However, increased capital per worker may not occur if the increased demand for wealth is satisfied by increased familial or public pension transfers to the elderly. Thus institutions and policies matter for the consequences of population aging. The accumulation of human capital also varies across the transition. Lower fertility and mortality are associated with higher human capital investment per child, also raising labor productivity. Together, the positive changes due to human and physical capital accumulation will likely outweigh the problems of declining support ratios. We will draw on estimates and analyses from the National Transfer Accounts project to illustrate and quantify these points.
Keywords: population aging, macroeconomic, demographic transition, consequences, human capital, economic growth, support ratio, demand for wealth
JEL Classification: E1, J1
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Demographic Transitions and Economic Miracles in Emerging Asia
-
Economic Growth and the Demographic Transition
By David E. Bloom, David Canning, ...
-
By Allen C. Kelley and Robert M. Schmidt
-
By James Feyrer
-
Global Demographic Change: Dimensions and Economic Significance
By David E. Bloom and David Canning
-
By James A. Brander and Steve Dowrick
-
Economic and Demographic Change: A Synthesis of Models, Findings, and Perspectives
By Allen C. Kelley and Robert M. Schmidt
-
Population Aging and Intergenerational Transfers: Introducing Age into National Accounts
By Andrew W. Mason, Ronald D. Lee, ...
-
Fertility, Female Labor Force Participation, and the Demographic Dividend
By David E. Bloom, David Canning, ...