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The impact of population aging in rich countries: What’s the future?

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  • Papapetrou, Evangelia
  • Tsalaporta, Pinelopi

Abstract

The paper examines the impact of population ageing on macroeconomic outcomes, inflation and labour force participation employing a sample of 23 OECD developed countries from 1960 to 2014 and accounting for the institutional context. Controlling for collective bargaining coordination the results show that a larger elderly share of population would lead to lower real GDP growth, albeit mostly in countries with low population growth rates. Ageing puts substantial downward pressure on inflation due to subdued aggregate demand. Also, results demonstrate that the ageing of the workforce tends to reduce labour supply. To mitigate any adverse effects of population ageing, a combination of labour market policies, pension reforms, greater investment in human capital and technological innovation should be prioritized in policy making.

Suggested Citation

  • Papapetrou, Evangelia & Tsalaporta, Pinelopi, 2020. "The impact of population aging in rich countries: What’s the future?," Journal of Policy Modeling, Elsevier, vol. 42(1), pages 77-95.
    • Handle: RePEc:eee:jpolmo:v:42:y:2020:i:1:p:77-95
    DOI: 10.1016/j.jpolmod.2019.12.002
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    1. Goh, Soo Khoon & Wong, Koi Nyen & McNown, Robert & Chen, Li-Ju, 2023. "Long-run macroeconomic consequences of Taiwan's aging labor force: an analysis of policy options," Journal of Policy Modeling, Elsevier, vol. 45(1), pages 121-138.

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    More about this item

    Keywords

    Demographic trends; Population ageing; Macroeconomic performance; Collective bargaining;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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