Age-Distribution Dynamics During Demographic Transitions

Abstract

Everyone knows that population aging refers to the phenomenon of a growing proportion of old people. This may happen 60 years after a “baby boom”, as the “baby boomers” begin to reach their old age. Population aging may also be a natural consequence of demographic transitions, for we know that the proportion of old people will increase as the fertility rale declines. Although there have been numerous economics research papers on topics related to population aging, the focus of most of these research projects has not been on the process and dynamics of population aging but rather on the various problems of the elderly (such as housing, pension, medical care, savings, and retirement) that will grow as the population ages. The typical example is the series of research projects on the economics of aging undertaken by the National Bureau of Economic Research. These research reports were edited by David Wise into several books on aging. In order to make some policy suggestions, however, we must be able to derive the future dynamic pattern of the age distribution, so that the macro level prediction of some age-related variables can be arrived at analytically instead of numerically. Unfortunately, little analytical work has been done along these lines. The purpose of this chapter is to derive the analytical pattern of the age distribution dynamics, which not only helps us calculate the aggregate value of age-related variables but also gives us some insight into finding reasonable aging indexes. Previous researchers often adopted the common measure of population aging, “the proportion of the population older than a critical age,” which is called the “head-count ratio” of the aged. As the head-count ratio of the aged rises above 10%, by instinct one may realize the seriousness of the aging problem. But since we know little about either the formal dynamics or the economic implications of population aging, we do not even know whether the head-count ratio is an appropriate index for characterizing the seriousness of the aging problem. We will show in later sections how information on age distribution dynamics helps us identify reasonable indexes of population aging.