Some Macroeconomic Aspects of Global Population Aging

31 Pages Posted: 9 Jan 2010

See all articles by Ronald D. Lee

Ronald D. Lee

University of California, Berkeley - Department of Demography; National Bureau of Economic Research (NBER)

Andrew W. Mason

University of Hawaii at Manoa; East-West Center - Research Program

Date Written: January 6, 2010


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

Lee, Ronald D. and Mason, Andrew W., Some Macroeconomic Aspects of Global Population Aging (January 6, 2010). Available at SSRN: or

Ronald D. Lee (Contact Author)

University of California, Berkeley - Department of Demography ( email )

2232 Piedmont Avenue
Berkeley, CA 94720-2120
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andrew W. Mason

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

East-West Center - Research Program ( email )

1601 East-West Road
Honolulu, HI 96848
United States

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