Demographic dividend in Latin America: Economic effects of changes in population age structure

Abstract

Demographic dividend is the potential economic growth caused by the change of population age distribution. With the continuous decline of fertility rate for decades, the age distribution of the population has changed from young age structure to young people of working age. This provides a window of opportunity for further economic growth and poverty reduction. In other words, as the relative size of the labor force increases, the country’s production is expanding because there are more workers and producers. However, this window of opportunity is not automatic and may last for a short time. Therefore, economic, social and government policies are needed to create an enabling environment for the absorption of large numbers of labor in the most productive sectors. Strategic investments in human capital (education and health) are needed to adequately respond to growing economic opportunities. Many Latin American countries have begun to realize the demographic dividend. Over the past decade, the region’s economy has continued to grow, creating favorable conditions for absorbing more and more young adult labor.