Population aging and the generational economy: key findings

Abstract

The goal of this study is to improve our understanding of how changes in population age structure are influencing national economies. Until recently changes in age structure were favorable for most countries as populations became increasingly concentrated in the working ages. For some countries in Asia and most in Africa, this trend continues today. But elsewhere—in the West, East Asia, and Latin America—the share of the working-age population is in decline or soon will be, as the share of the elderly population grows. Many concerns have been raised: bankruptcy for publicly funded health care and pensions systems, slower economic growth and possibly decline, unfair treatment of children vis-a-vis the elderly, the collapse of financial markets, and the burdening of future generations, to name a few. Effectively addressing the economic challenges of population aging is especially difficult, for two reasons. The first is that countries cannot rely exclusively on their own experience because in any given country changes in population age structure are occurring for the first time. Hence it is essential to learn from societies that have been the first to experience the age transition. The second problem is that many issues are addressed in piecemeal fashion, relying on partial and incomplete data. This study addresses this problem by relying on a newly developed system of accounts, National Transfer Accounts. Of course, there are many outstanding studies of these issues, and we draw upon them; but many questions remain, and myths and misunderstandings persist about the economic implications of changes in population age structure. The global age transition