The Effects of Aging on Labor Markets and Economic Growth

Abstract

In the late 19^th century when population growth in Europe was still high Thomas Malthus projected a miserable future with populations outgrowing food supply. Such fears are now gone, at least in developed countries but are replaced by other fears that population growth could be too small to sustain living standards. People fear that with aging populations there may be not enough workers to feed the growing number of pensioners. Almost everyone seems to be worried about an “aging time bomb” leading to breakdowns of pension systems and there is talk of a future warfare between young and old generations. Young generations expect their living standards to be cut as they have to support the growing number of elderly people, and those middle-aged and close to retirement fear that their pension benefits will be cut and they may perhaps even end up in poverty. Different demographics between countries and world regions are also expected to shift economic and political power to younger fast growing countries and away from aging countries with weaker economic growth.