Silver Linings in an Aging World

When larger populations compete for the same resources, existing fault lines in a society are exacerbated. In many of these countries in the 1950s and 1960s, investment and resources did not keep up with the growing labor force. As my research has documented, the expected economic dividend from better health and a larger population did not materialize, and most of these countries experienced a slowdown in their per capita income growth.

That observation offers a way to think about the complexities that aging and slower population growth bring to the economy. Many commentators, just like the IMF, are convinced that aging and stagnant populations will create a huge economic burden, but the evidence from the past 70 years suggests a more nuanced and more optimistic outlook. When populations surged in several developing nations in the 1950s and 1960s, their GDP did not keep up, and their per capita incomes fell compared to countries with stable populations. Over the last 70 years, where birth rates fell, mostly in the industrialized countries, GDP did not suffer, and per capita incomes grew more rapidly.