Implications of population ageing for economic growth

The share of the population aged 60 and over is projected to increase in nearly every country in the world during the period 2005-50. Population ageing will tend to lower both labour-force participation and savings rates, thereby raising concerns about a future slowing of economic growth. Our calculations suggest that OECD countries are likely to see modest-but not catastrophic-declines in the rate of economic growth. However, behavioural responses (including greater female labour-force participation) and policy reforms (including an increase in the legal age of retirement) can mitigate the economic consequences of an older population. In most non-OECD countries, declining fertility rates will cause labour-force-to-population ratios to rise as the shrinking share of young people will more than offset the skewing of adults towards the older ages. These factors suggest that population ageing will not significantly impede the pace of economic growth in developing countries.