Economic and Social Consequences of Population Aging the Dilemmas and Opportunities in the Twenty-First Century

Abstract

Population aging is one of the most important demographic features that has come into prominence in the twenty-first century. In general, longevity has increased while fertility has declined resulting in an increase in the proportion of the older people. Aging of the population affects all aspects of the society including health, social security, education, socio-cultural activities, family life and the labor market. Regarding the latter, a decline in the young population of working age lowers the labour force participation rate, leading to a rise in the proportion of retired people. While governments in both developing and developed countries primarily focus on the negative effects of this for socio- demographic development, they have often also considered how such labour shortages can be mitigated by increasing the retirement age. Regarding care of the elderly, if fertility continues decreasing then this will inevitably lead to a lack of care workers, both paid and unpaid, especially, for elderly people. The social and economic provision of care still creates gender dilemmas for societies by narrowing the range of employment opportunities for women. As caring responsibilities are in general better fulfilled by women, high demand for paid care workers will increase women’s participation in the labor market in place of their role as unpaid care workers in the household. This paper analyzes possible changes in several variables, including labour force participation, the pension system, retirement age and labour supply. It places special emphasis on a variety of demographic and policy forces that are vitally important for evaluating the impact of population aging on economic growth. It also considers the implications of these developments for closing the gender gap in pension provision. It ends by offering some policy options aimed at forming the active policies that are essential for coping with the world’s rapidly increasing number of older people.