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Population Aging and Economic Growth: From Demographic Dividend to Demographic Drag?

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  • Rainer Kotschy
  • David E. Bloom

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

  • Rainer Kotschy & David E. Bloom, 2023. "Population Aging and Economic Growth: From Demographic Dividend to Demographic Drag?," NBER Working Papers 31585, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31585
    Note: AG DEV EFG EH LS PE
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    References listed on IDEAS

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    1. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
    2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    3. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
    4. Breitung, Jörg & Kripfganz, Sebastian & Hayakawa, Kazuhiko, 2022. "Bias-corrected method of moments estimators for dynamic panel data models," Econometrics and Statistics, Elsevier, vol. 24(C), pages 116-132.
    5. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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    Cited by:

    1. Jesús Fernández-Villaverde & Gustavo Ventura & Wen Yao, 2023. "The Wealth of Working Nations," NBER Working Papers 31914, National Bureau of Economic Research, Inc.
    2. Pawel Chrostek & Krzysztof Karbownik & Michal Myck, 2024. "Labor Market Externalities of Pre-Retirement Employment Protection," CESifo Working Paper Series 11078, CESifo.
    3. Steven Brakman & Tristan Kohl & Charles van Marewijk & Charles van Marrewijk, 2024. "DemoGravity: World Population and Trade in the 21st Century," CESifo Working Paper Series 11262, CESifo.
    4. Zuzanna Kowalik & Piotr Lewandowski & Tomasz Geodecki & Maciej Grodzicki, 2023. "Automation In Shared Service Centres: Implications For Skills And Autonomy In A Global Organisation," IBS Working Papers 08/2023, Instytut Badan Strukturalnych.

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    More about this item

    JEL classification:

    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • 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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